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One picture tells me Australia -- seemingly stable now -- is heading into another global depression -- and their third debt bubble since 1890 is the reason for this coming collapse.

The chart below shows Australia's debt/GDP ratio. Australia's debt/GDP ratio was around 110% in 1890, around 75% in 1930, and is now around 160% of GDP.

In 1890, Australia had the worst depression in the country's history.

In 1930, Australia also suffered through depression with the rest of the world, although the 1890 depression was more severe and lasted longer -- the 1930 depression was exasperated by the social/political deconstruction brought on by World War II. We remember that Australia was nearly invaded by the Japanese.

Debt causes depression. Can anyone look at this chart and not understand that our current global malaise is more than an economic downturn -- it is depression brought on by debt-congestion?

Australian debt collapsed from 1890 to about 1920. Debt levels then grew for about ten years, before collapsing again until about 1950. The current debt/GDP in Australia is more than twice the debt level in 1930 and is nearly 50% larger than the debt bubble of 1890, which resulted in the worst economic depression and bank crisis in the history of Australia.

There is no getting back to business-as-usual until all this debt is paid back, or destroyed through default and bankruptcy. This will take at least a generation to accomplish.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Ludwig Von Mies

Michael J. Clark, Hanoi, Vietnam