Government Debt Isn’t the Problem—Private Debt Is
This is one of the articles I brought up in our last interview with Chris Temple. The fact is, private debt continues to pile on at a rate greater than that or public debt. Both of these debt levels need to be going down if the Fed has any ambition of raising interest rates. Any increase in rates would further send the average American into the poor house which the administration wants to avoid. One aspect that stuck with me was watch out for China… Huge private debt as seen in the chart below.
Besides even if you assume that Federal debt is $17.7 trillion, don’t you think the interest on that debt will be a major problem if interest rates were raised to limit inflation?
The fact is that IF inflation takes off due to money printing we will get into an unstable positive feedback loop:
Raise rates to reduce inflation implies printing more to pay interest, implies more inflation due to printing, implies more inflation….
The Fed CANNOT raise rates without causing instability, so it WON’T raise rates if/when inflation takes off.
Basic and simple economics, Professor! But, you know that!
AL…DITTO.
One exception. FED can buy all the debt and send the interest money back to treasury. It is still 0% equivalent.
Do that and the US dollar goes to zero, as in Zimbabwe.
Tried and failed.
CFS…..DITTO.
It’s the government debt that has caused the private debt, who do you think pays for the government’s debt, If you live in Canada we pay 13% HST on everything but food items bought at the grocery store only. Every time we get a utility bill there is a debt retirement charge added because the government has passed costs down to the public to pay the huge pension and wage plans for these workers. This no interest rate policy being implemented by the government has caused real estate to explode so much so that houses cost 1 million dollars here for a shack and what does that do to your property tax bill, the list goes on and on, too numerous to mention.
Come to Calgary. We have only 5% GST and I never heard about the charges you mentioned. Except high house prices, it is better compared to the rest of country. The provincial income tax is only 10% flat. Well-paid jobs are easy to find. Calgary has the highest salary in the country.
ALL DEBT IS PRIVATE! Unless you believe GUBMINT creates wealth.
That’s what I was going to post!
Easy credit = entrapment:
Banks ‘giveaway’ credit cards to those least able to use them wisely.
The users run them up to their limit and spend the rest of their life paying them off at 20% interest
The banksters go to the ‘window’ and borrow at near 0% to cash flow to cash flow their credit card scheme.
Meanwhile a gallon of milk costs more than it used but is only 3 quarts! Ditto for other food items, dry goods and daily essentials.
Thus we see how central banks and their crony underlings rape an economy, steal the wealth of nations and put the people therein into perpetual economic servitude.
Noy a bad way to make an easy living if you can get away with it…and they do.
bj……………..correct…..but the fools don’t get it !!!
Oldest story in the world. There are just a few wolves and a whole lot of sheep to be fleeced (and eaten). Which would you rather be?
Last I heard gummit debt was at around 100% of GDP and I believe that was just for the Feral gummit, not state and local. The graph shows about 25% which seems absurdly low.
I question the validity of public debt/GDP graph.
Too many off the books items