Summary Points
- 53 trillion in debt outstanding in the economy as reconned by the Federal Reserve
- Consumers have hit debt wall
- Private business has hit debt wall
- State and Local government have hit debt wall
- Only Federal government debt and "bets on financial activity" are still going up – attempt to keep up the charade?
- debt to GDP – very stable until mid 1980’s – had very low interest rates during 1950’s and 1960’s – did not have unsustainability – he blames deregulation
- In 2000 per capita credit declined – Greenspan cranked open credit and created the bubble – then we ran into the credit wall
- You can see the credit wall in the graph
- How to get the economy moving again? How get debt ratio down to level of year 2000? – You would have to take 50% off of the debt outstanding or increase GDP significantly and thereby increase consumer income
- What will the outcome of continuing to pull forward demand by borrowing by the federal government?
- What is the outcome of placing ever larger bets on the price of commodities and equities by financial institutions?
- There is no way to get the GDP to grow again without consumers income increasing
- Appears to be a mathematically impossible attempt to stimulate the economy
- To the individual – make sure you have a sturdy desk nearby that you can get under in case of economic earthquake.
0 Comments