When debt reaches diminishing returns

Too much debt is not going to boost GDP. Instead it subtracts value and is like pushing on a string. 

Sample this graphic about the explosion of debt in the US economy since the eighties.

And this about its incremental contribution to growth.

Worse still, most of the money released does not even reach the markets.

Underlining the diminishing returns associated with debt-fuelled growth is this graphic which captures the debt-adjusted economic growth rates of China and India (HT: Ananth).

Clearly, China's impressive growth story over the last three decades looks far less impressive, especially since the GFC. It's more value destruction than creation.