From the Daily Pfenning this morning: Chuck has a funny way of writing, but he’s been battling cancer making it’s way through his body for quite a few years now, and he still writes every day.
“I would like to direct your attention to this next passage as I really get on my soapbox regarding debt.
Here’ goes!
Debt is everywhere folks.
I’ve said this before, but I think there are times when things need to be said again and again, until everyone, and I mean everyone, including those knuckleheads that still believe that debt doesn’t matter realize the error in their thinking.
And that is.. That too much debt is bad for an economy.
An economy with too much debt will not be able to grow because the debt drains away vital resources from economic growth. But what do the mental giants in this country claim that we need to do?
Issue more debt!
Fighting debt with more debt has been a losing equation since the Great Recession (which never really ended in my opinion, but officially ended 7 years ago) and there’s nothing that would indicate that fighting debt with more debt would work in the future!
Did you see where Consumer Credit (read debt) exploded higher in March to $29.7 Billion!? That’s a 10% annualized pace for debt increases. OMG!
And it wasn’t the usual suspects of car loans or student debt that was responsible for this HUGE increase. Try Credit Card Debt rising at a 14% pace or $11.1 Billion! Household debt rose at 6.4% in the 1st QTR, which is 3 times the pace at which hourly earnings grew.
And I ask you this.
How can that be sustainable?
And it’s not just here in the U.S. that debt is growing. Worldwide debt is spiraling out of control folks.
A recent McKinsey report showed global growth had increased by $57 Trillion from 2007 to 2014. So, let me get this straight. 2007 and 2008, the financial meltdown occurred, and too much debt was deemed to be one of the problems, and how did the world go about correcting that? They added $57 Trillion in new debt to the already deemed “too much debt” total in 2007!
Wait, What?
So, does this all come crashing down tomorrow, or the next day, next week, next month? I don’t think so. I think this is going to continue growing at unsustainable levels until. it no longer does. That’s when we will have our Minsky Moment.
I know, I know, that sounds vague, but in reality that’s how these things work. it goes on until it no longer goes on.
One day, I’ll wake up, and get ready for work, I don’t check the news on the car radio on my drive into the office, because I don’t want to know anything yet.
No distractions when driving! But when I get to the office and turn on the TV and screens and everything is chaos, and Gold is soaring by hundreds of dollars a pop, and stock futures are sinking faster than a boat without a hull, and the news anchors are screaming, “Oh the humanity”.
Then I’ll know that this accumulation of debt no longer goes on.”
YODA_bite me (you know who)
May 13, 2016 1:08 pm
Admin…”Real wages even rose during the Great Depression for Christ sake.”
Wasn’t that due to Roosevelt banning gold in 1933 and told to cash it in for $20 ( unsure of exact price) and then upping the price on gold to $35.
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From the Daily Pfenning this morning: Chuck has a funny way of writing, but he’s been battling cancer making it’s way through his body for quite a few years now, and he still writes every day.
“I would like to direct your attention to this next passage as I really get on my soapbox regarding debt.
Here’ goes!
Debt is everywhere folks.
I’ve said this before, but I think there are times when things need to be said again and again, until everyone, and I mean everyone, including those knuckleheads that still believe that debt doesn’t matter realize the error in their thinking.
And that is.. That too much debt is bad for an economy.
An economy with too much debt will not be able to grow because the debt drains away vital resources from economic growth. But what do the mental giants in this country claim that we need to do?
Issue more debt!
Fighting debt with more debt has been a losing equation since the Great Recession (which never really ended in my opinion, but officially ended 7 years ago) and there’s nothing that would indicate that fighting debt with more debt would work in the future!
Did you see where Consumer Credit (read debt) exploded higher in March to $29.7 Billion!? That’s a 10% annualized pace for debt increases. OMG!
And it wasn’t the usual suspects of car loans or student debt that was responsible for this HUGE increase. Try Credit Card Debt rising at a 14% pace or $11.1 Billion! Household debt rose at 6.4% in the 1st QTR, which is 3 times the pace at which hourly earnings grew.
And I ask you this.
How can that be sustainable?
And it’s not just here in the U.S. that debt is growing. Worldwide debt is spiraling out of control folks.
A recent McKinsey report showed global growth had increased by $57 Trillion from 2007 to 2014. So, let me get this straight. 2007 and 2008, the financial meltdown occurred, and too much debt was deemed to be one of the problems, and how did the world go about correcting that? They added $57 Trillion in new debt to the already deemed “too much debt” total in 2007!
Wait, What?
So, does this all come crashing down tomorrow, or the next day, next week, next month? I don’t think so. I think this is going to continue growing at unsustainable levels until. it no longer does. That’s when we will have our Minsky Moment.
I know, I know, that sounds vague, but in reality that’s how these things work. it goes on until it no longer goes on.
One day, I’ll wake up, and get ready for work, I don’t check the news on the car radio on my drive into the office, because I don’t want to know anything yet.
No distractions when driving! But when I get to the office and turn on the TV and screens and everything is chaos, and Gold is soaring by hundreds of dollars a pop, and stock futures are sinking faster than a boat without a hull, and the news anchors are screaming, “Oh the humanity”.
Then I’ll know that this accumulation of debt no longer goes on.”
Admin…”Real wages even rose during the Great Depression for Christ sake.”
Wasn’t that due to Roosevelt banning gold in 1933 and told to cash it in for $20 ( unsure of exact price) and then upping the price on gold to $35.
YODA
It was mostly due to deflation, which made “real” wages higher.