The Debt Delusion
As US policy-makers desperately seek to stave off recession by slashing interest rates and enacting stimulus packages, a fundamental contradiction continues to be overlooked: since 1980, the US economy has relied upon asset price inflation and rising indebtedness, not wage income, to fuel consumer demand, investment, and output growth.
WASHINGTON, DC -- A second big American interest-rate cut in a fortnight, alongside an economic stimulus plan that united Republicans and Democrats, demonstrates that US policymakers are keen to head off a recession that looks like the consequence of rising mortgage defaults and falling home prices. But there is a deeper problem that has been overlooked: the US economy relies upon asset price inflation and rising indebtedness to fuel growth.
WASHINGTON, DC -- A second big American interest-rate cut in a fortnight, alongside an economic stimulus plan that united Republicans and Democrats, demonstrates that US policymakers are keen to head off a recession that looks like the consequence of rising mortgage defaults and falling home prices. But there is a deeper problem that has been overlooked: the US economy relies upon asset price inflation and rising indebtedness to fuel growth.