The Huffington Post
Household Debt Is Still Too Damn High
Mark Gongloff
Household debt is still a big problem, but don't be confused: Government debt is not a problem. In fact, the government should be going deeper into debt now, while interest rates are still relatively low, to help generate demand while consumers continue to nurse themselves back to health.Good for Mark. He gets it.
4 comments:
He sort of gets it as he says government should be going into debt now while "interest rates are low."
There's that misplaced belief again, that as long as we can "afford" to borrow.
Well, I am willing to give him that much. At least he is not a moron.
Cullen Roche disagrees. He claims households have pretty much fully de-leveraged. He prefers debt to income as his metric.
http://pragcap.com/is-household-debt-still-too-high
Mal,
We are tracking the govt "top line" yoy and thru August 14th, it is at 3.686T while last year at August 14th it was at 3.675T so we are only up yoy a measly 11B I guess with the sequester... as at points earlier during the year, we have been up yoy more than this...
So an additional 11B yoy of leading govt to non-govt flow just cannot imo justify much increase in "loans and leases" which ultimately depend on increases in top-line income...
iow, when you go to get a loan, they dont ask you: "how much do you make after taxes, they ask you what your top-line household income is...
Without an increase in the govt top-line number, there isnt going to be any increase in system income to qualify for more credit...
If you look at the Feds H.8 report here page 2:
http://www.federalreserve.gov/releases/h8/current/default.htm
You can see that bank credit is up yoy about 250b, but has flatlined since about April/May when the sequester kicked in... (its actually come off a bit....)
So we were cruising along not too bad earlier this year with some Federal top-line increase this year and the associated income growth that creates, which then enables the associated increase in bank credit thru about March/April then the sequester has kicked in and POOF!
So unless we get some decent yoy govt top-line spending growth, we're not going to see any growth in either incomes or credit...
"govt spends first and then...." (everything else happens off of that) under a state currency system monetary economy...
From my last Del Mar post:
"Suffice it to say in this place that after many experiments with coins of gold and silver in the Greek and Roman republics, these metals had been so far abandoned as money that the measure of value in those states was eventually made to depend less upon the quantity of metal contained in the coins, than upon the number of coins emitted and kept in circulation by the state."
so this is the way it has to work under this "nomisma" type system.... govt has to maintain FLOW.... if we want growth, in either incomes or credit also, govt has to INCREASE its top-line...
They are NOT doing that at this time as far as we can tell....
We may have to wait until next FY which is actually only 45 days away, for govt to increase the current monthly top-line flow as Lew will get a fresh set of books to start to work with...
rsp,
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