This dramatic rise is most likely caused by austerity and the government’s reduction of the deficit, though the post referendum stagnating wages and rise in inflation has also spurred on the level of debt. The relation with public and private debt is one that is of increasing interest to Post-Keynesian economists especially those who put their faith in Modern Monetary Theory. MMT would suggest the dropping government deficit is pushing the rest of us into deficit but the way the government has gone about this may be a bigger reason for the substantial rise in debt.
Whatever the cause the rising debt has economic repercussions. Consumer spending is a vital part of our economy and while debt can help fuel spending in our economy, predictably those with higher debt also limit their spending and in our post-crash economy the impact of household debt has been to hurt growth via the limitation of spending. Equally the possibility of this debt has to cause serious problems in our economy should not be underestimated. If you want to know what happens when a bubble of debt burst research the 2008 financial crash. Credit can benefit the economy but always has risk and this level of it presents a threat to our economy.
We should ask serious questions of how our economy would fair in a recession caused by another factor that we may be heading into to. Wages have not recovered from the crash of 2008 and with household debt at record levels we are in a much worse place than we were when the global financial crash struck in 2008. Make no mistake the large household debt that hangs over us has an unrealised detrimental effect to society.
Debt also provides a deeper challenge to society, in both its welfare and liberty. According to philosophers like Lazzarato and Goodchild debt greatly reduces liberty and by binding us to the will of credit. In a wider economic sense this means that this dramatic rise in household debt greatly damages the liberty of citizens through the need to pay their debts. Therefore, elimination of this debt should be a priority of parties across the political spectrum, whether they seek to maximise welfare or liberty, yet neither party has substantial policies designed to address it.…The London Economic
Household debt is a problem- But its one our politicians don't want to talk aboutIwan Doherty
3 comments:
Government privileges for private debt/credit creation are largely responsible for that debt but no MMT advocate I've heard proposes to do anything about those privileges except Warren Mosler, who proposes to INCREASE those privileges to near impunity from market discipline!
Wow. Even the really slow kids in school note that the horrors described by the Austrian Business Cycle Theory are sitting right on their noses. But peer presure insures that everyone will pretend it's not there and no one will mention it.
Pitiful.
By making a Nation's fiat difficult, if not impossible to create, Austrian policies drive the population into the arms of private debt/credit creators; i.e. into the arms of the banks.
Thus Austrian policies are pro-bank, pro-private debt, and pro-boom/bust cycles.
If the Austrians were against the population being driven into debt, they would favor the creation of adequate amounts of fiat in a just manner so as not to rob via Cantillon effects and also favor policies that made the USE of fiat by all citizens to be safe and convenient.
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