So The G20 Finance Ministers are having a meeting …

In Shanghai no less, epicenter of recent market volatility. Apparently on their agenda is a discussion that will allow these nations to agree a way forward to improve global growth. The IMF is urging bold action, while China suggests is has a few tricks up its sleeve in fact more than a few , while both The British and Germans both argue further currency devaluations or negative interest rates would be counterproductive.

Music to my ears, as long as they don’t repeat 2009 when the G20 Finance Ministers pledged “to do whatever is necessary to restore confidence, growth and jobs” (among other pledges) as IT DIDN’T WORK.

The chart below shows G7 growth from 1960 to the present. The vertical gray bars represent US recessions, and for each non recessionary period I’ve calculated the average across the term.




After the post World War 2 spurt of economic activity focused on rebuilding Europe, the overall trend for global growth is apparent — slowing. From the mid 1980s debt levels in The United States sharply soared. Concerning, because the relationship between excessive sovereign debt and slowing economic activity is well defined, as Rogoff & Reinhart have asserted many times, both in academic journals as well as mainstream media. This “growth at any cost” agenda led to what many are calling the worse economic recovery since the end of World War II.

So what can the G20 do to increase growth rates? Maybe nothing at all — some suggest the post World War II growth spurt was due to a confluence of factors such as technological innovation or mass migration of people that we may never see again.

Keeping in mind that from 1850 to 1913 the long run average global growth rate was roughly 2.1% its less likely we’re going to see sustainable growth rates above 2% ever again.

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