Debt is a call on future earnings, i.e. it presumes there will always be economic "growth" (however you may define it) in order to produce those future streams of income which will service the debt. This is a condition I have called "Permagrowth".
But is it possible?
In the "real" world, where physical fact always trumps populist monetary neo-theology, Permagrowth is impossible by definition. The Second Law of Thermodynamics reigns supreme, i.e. there is no perpetual motion machine - and can never be.
The entropy of the universe tends to a maximum is the "classical" expression of the Second Law, so I come up with a corollary: as the universe always tends to disorder, so debt always tends to default.
In other words, since Permagrowth is impossible so is Permadebt.
P.S. My blog is getting the attention of "comment advertisers", i.e. advertisers who hawk their wares under the guise of "I love your blog" comments. Par for the course, of course, and I usually quickly clean up the comment section. What is interesting, however, is that lately they are hawking gold, gold market tips, etc. Nice contrarian signal, in my opinion.
P.P.S. Speaking of such ballistic charts, in a post four years ago (South Seas and China Seas) I posted the following chart, comparing the famous South Seas Bubble with the price of a (then unnamed) shipping company.
I did not mention the name of the company at the time because I felt it should not be singled out in what was, after all, an industry-wide bubble. Nevertheless, some readers immediately identified the company as Dryships, a bulk-carrier shipping company.
Four years later, this is what happened.
Other than self-congratulation, my point is pretty simple: beware of all bubbles, no matter how "logical" they seem at the time. In fact, the more "logical" they appear the closer they are to bursting. The devil, as always, is in the timing, of course...