Total Australian Credit

$7,448,688,699,080

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AUD

 

Total Australian Credit outstanding includes all debt and equity outstanding of the domestic non-financial sectors.

Total Australian Credit has grown from AU$787.7 billion in December 1989 to AU$6.3 trillion in December 2016; an increase of a little over 800% over a 27 year period.


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Helping Australian’s gain a greater understanding around the circumstances of money and debt in the Australian economy in order to prepare and endure the next financial crisis.


Total Australian Credit

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Total Australian Credit outstanding is the aggregate of debt and equity outstanding of the domestic non-financial sectors.

Total Government Debt

$1,039,509,411,815

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AUD

 

Total Government Debt is the gross sum of liabilities across federal, state and local Government in Australia.

Total Australian Government Debt increased by a mere 13.5% from December 1989 to December 2007, from AU$81.2 billion to AU$92.1 billion.

However, from December 2008 to December 2017 Total Australian Government debt increased by over 520% from AU$115.4 billion to AU$716.3 billion.

The primary reason behind this increase has been to provide depth in the market for government bonds so that the Reserve Bank of Australia can easily increase liquidity through open market operations by printing more Australian Dollars and buying the government bonds back.

Total Household Debt

$2,604,875,412,867

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AUD

 

Total Household Debt includes all outstanding debt that Australian Households owe.

These debts are held with banks, other depository corporations, pension funds, insurance corporations, insurance corporations, money market investment funds, securitisers, other financial corporations, and international entities.

Household debt has increased over 1100% from December 1989 to December 2017, from AU$173.5 billion to AU$2.2 trillion December 2017.

Total Private Credit

$4,442,889,304,953

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AUD

 

Total Private Credit includes debt and equity issued to raise capital for private Australian enterprise. This credit consists of one name paper, bills of exchange, loans and placements and shares and other equity. Around 65% of this credit is weighted in share and other equity and is based on the indicative market valuation.

Total Private Credit increased over 620% from December 1989 to December 2017, from AU$532.9 billion to AU$386.0 billion.

The below chart shows the growth of Total Australian Credit since June 1988.

Total Government Debt

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Total of national government debt and state & local government debt.

Total Government Debt

$1,039,509,411,815

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AUD

 

Total Government Debt is the gross sum of liabilities across federal, state and local Government in Australia.

Total Australian Government Debt increased by a mere 13.5% from December 1989 to December 2007, from AU$81.2 billion to AU$92.1 billion.

However, from December 2008 to December 2017 Total Australian Government debt increased by over 520% from AU$115.4 billion to AU$716.3 billion.

The primary reason behind this increase has been to provide depth in the market for government bonds so that the Reserve Bank of Australia can easily increase liquidity through open market operations by printing more Australian Dollars and buying the government bonds back.

National Government Debt

$739,276,229,346

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AUD

 

Total national government debt includes all Commonwealth Government Securities (CGS) on issue plus any other liability obligations the Commonwealth government has.

Commonwealth government debt did decrease in the September quarter of 2017, but started increasing again in the December quarter of 2017.

State & Local Government Debt

$162,016,014,068

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AUD

 

Total Australian state and local government debt.

State & local government debt was decreasing from the begin to mid 2017, but started increasing again in Q3 and Q4 2017.

The below chart shows the growth of Australian Government Debt since June 1988.

Household Debt

Total Household Debt

$2,604,875,412,867

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AUD

 

Total Household Debt includes all outstanding debt that Australian Households owe.

These debts are held with banks, other depository corporations, pension funds, insurance corporations, insurance corporations, money market investment funds, securitisers, other financial corporations, and international entities.

Household debt has increased over 1100% from December 1989 to December 2017, from AU$173.5 billion to AU$2.2 trillion December 2017.

Housing Debt

$2,081,273,848,500

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AUD

 

Total of Australian household mortgage debt for housing (owner-occupied and investor).

Mortgage debt on housing has been the largest expansionary category of debt in the Australian economy over the last 20 years. The expansion of this debt has been the dominant factor for increasing broader money in terms of all deposits held with Australian Financial Institutions (AFIs). Without this mortgage debt a large portion of money held by households within AFIs simply would not exist.

 

The below chart shows the growth of Australian Housing Debt since January 1990.

The Money behind this Debt

The money behind and backing this debt, that ultimately supports the repayments and continuity of the system, is effectively unanchored and merely backed by confidence. The Reserve Bank of Australia (RBA) use Monetary Policy to manipulate the money supply to support debt levels through the production of fiat currency (a framework known as monetarism pioneered by Milton Friedman). Click here for more information on the Australian money supply.

The RBA outlines Monetary Policy on their website as;

The Reserve Bank is responsible for Australia’s monetary policy. Monetary policy involves setting the interest rate on overnight loans in the money market (‘the cash rate’). The cash rate influences other interest rates in the economy, affecting the behaviour of borrowers and lenders, economic activity and ultimately the rate of inflation.

In determining monetary policy, the Bank has a duty to maintain price stability, full employment, and the economic prosperity and welfare of the Australian people. To achieve these statutory objectives, the Bank has an ‘inflation target’ and seeks to keep consumer price inflation in the economy to 2–3 per cent, on average, over the medium term. Controlling inflation preserves the value of money and encourages strong and sustainable growth in the economy over the longer term.

Reserve Bank of Australia – Monetary Policy | rba.gov.au/monetary-policy

Naturally the common Central Bank strategy of monetarism has come under increasing scrutiny over since the Global Financial Crisis of 2008 and in the following years as the debt levels have become more and more unsustainable.

The Solution

Bitcoin and other cryptocurrency frameworks have proposed alternatives to this fiat currency system. While underlying blockchain of these solutions most definitely adds value to trust and accountability in the macro or micro economics system there fundamental problem being that the currency is still not backed by any anchor of scarcity. It is fair to say that each individual cryptocurrency has a limited supply on its own network, there is no limit to the supply of networks.

A tried and tested anchor for the monetary system has always been Gold. As J.P. Morgan once said 

‘…Money is gold, and nothing else.’

J.P. Morgan testimony to Samuel Untermeyer, chief counsel of the Pujo Sub-Committee of the House Committee on Banking and Currency (US Congress) – December 18, 1912 | goldmoney.com/research/goldmoney-insights/what-did-jp-morgan-mean

Historically money was backed by Gold in order to provide an anchor of scarcity to the money supply, but it has continued to hold value and withstand the test of time since President Nixon formally ended the Gold Standard in the 1970s. 

Federal Reserve Bank – History | www.federalreservehistory.org/essays/gold_convertibility_ends

Gold investment is a proven solution to wealth protection under this unanchored economic system with diminishing confidence. Furthermore, Gold has performed extremely well under climates of economic uncertainty like the 2008 Global Financial Crisis. 

One of the easiest and most secure ways to invest in Gold is with GoldMoney that offer a secure digital solution for allocated physical Gold investment. 

Most notably, in recent times the RBA has been increasing their Gold holdings in line with many Central Banks around the world. In July 2018 the RBA had $2,698 million USD of Gold holdings as Official Reserves on their balance sheet, by July 2019 these holdings rose to $3,155 million USD. 

Reserve Bank of Australia – Official Reserve Assets | rba.gov.au/statistics/frequency/reserve-assets.html

After all, Gold is the only real asset on the RBA balance sheet outside of the confidence (albeit diminishing confidence).
Goldmoney Wealth

Australian Debt Clock.com.au | Ethos 

Australian Debt Clock.com.au is dedicated to helping Australian’s expand their understanding of the role of money in the economy. Understanding the trending environment of money, credit and debt is fundamental to an effective financial strategy for both business and households. Having a strategy that does not account for Financial Stability risk is unequipped to handle any future shocks to the Australian financial system.

The Reserve Bank of Australia (RBA) publish the Financial Stability Review on a semiannual basis (April & October) to help provide insight across the forecast/actual and cause/effect of the stock and flow of money, credit and debt.  Financial Stability of the Australian economy is a mandate of the RBA outlined on their website;

‘Maintaining the stability of the financial system is a longstanding responsibility of the Reserve Bank. A stable financial system is one in which financial institutions, markets and market infrastructures facilitate the smooth flow of funds between savers and investors. This helps to promote growth in economic activity.

Reserve Bank of Australia – Financial Stability | rba.gov.au/fin-stability

The RBA explicitly DOES NOT GUARANTEE financial stability.

Australian Debt Clock.com.au was founded in 2010, in light of the Global Financial Crisis to help inform Australians of our nations trending money, credit and debt levels (comparable to international trending debt levels, ie. the United States – usdebtclock.org).


 

The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.