- The case of the missing credit impulse
- The credit impulse is the worst its been in recent history
- How the situation is deteriorating fast
- Why a credit impulse-driven recession is nigh
If you have not yet read Part 1: The Pin To Pop This Mother Of All Bubbles? available free to all readers, please click here to read it first.
The Case Of The Missing Credit Impulse
An enormous oversight of nearly every major economist is the role of debt in both fostering current growth but also stealing from future growth.
It seems like such a simple concept, and it’s one I covered in great detail back in 2008 in the original Crash Course, but it remains a mysterious oversight of most here in 2017. The concept is easy enough; if I borrow money to increase my spending here today, it probably makes sense to take note of that if you're an economist responsible for tracking spending.
My debt-funded spending today is my lack of spending in the future when I pay down the debt.
Professor Steve Keen has this topic nailed beautifully. In it, he explains how even simply keeping a massive pile of previously accumulated debt at the same level as last year is a net negative on economic growth. A very simple and a very profound concept that still is not a part of conventional thinking.
Now here where things get interesting. And frightening. If we look at…