Rounds of 'cheap' money over, now worry about the huge debt

THE US Federal Reserve has finally "pressed the button" on ending its massive monetary easing, but the action has created remarkably little market alarm so far. However, this calm is likely to last only until shock waves begin spreading out across the sea of liquidity that the Fed has created.

This is not so much about shock to the US economy (though that may prove to be greater than expected) but about the likely trauma to myriad economies where dollar liquidity has flowed in tidal waves, pushing up asset prices to bubble levels and fuelling a massive borrowing binge.

The world has gone deeply, deeply into debt since the 2008 global financial crisis, to the point where global debt has hit US$217 trillion, equal to a record 325 per cent of gross domestic product (GDP), according to the Institute of Inte…