Others saw this in April 2013.
Here's Bill Gross in September 2014:
The current outstanding total [credit] approximates $58 trillion and has been expanding at an average annual rate of 2% for the past five years, and 3.5% for the most recent 12 months. Put simply, if credit needs to expand at 4.5% per year, then the private and public sectors in combination must create approximately $2.5 trillion of additional debt per year to pay for outstanding interest. They are underachieving that target in the U.S., which is the reason why GDP growth struggles at 2% real or lower and nominal GDP growth seems capped at 4.5% or lower. Credit creation is essential for economic growth in a finance-based economy such as ours. Without it, growth stagnates or withers.
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What Bill Gross doesn't seem to appreciate is the gravity of this slowdown historically to total credit expansion of just $1.14 trillion annually. TCMDO, total credit market debt outstanding, in the post-war DOUBLED every 6 to 11 years until 2007. That implies that normal credit expansion until 2007 was between 6% and 11% PER ANNUM. At 8.5%, an average level, TCMDO should grow well in excess of $4 trillion annually at these levels. 4.5% isn't going to cut it. And the actual 2% or even 3.5% is a catastrophe compared with the historical record.
By 2013, according to historical norms, TCMDO could have already reached $100 trillion if it matched the fastest pace on record under Jimmy Carter and Ronald Reagan. Instead it's stuck at $58 trillion in 2014.
The system has hit the wall. Decades of economic shrinkage, to borrow Chris Whalen's phrase, lie ahead, and we're already in the first one.
Incidentally, nonfinancial corporate debt has grown on average $567 billion annually between 2010 and 2014, accounting for about 50% of the average increase in TCMDO. And in 2013, corporations bought back something like $600 billion worth of their own stock.
