An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Tuesday, February 13, 2018
Zero Hedge — Household Debt Rises By $572 Billion, Ends 2017 At All Time High
So hard to tell if that's a good thing or a bad thing, though. If more people are taking on debt because their income has risen, then it's a good thing.
Right. The question is at what point the debt starts to become unsustainable. This is a function of debt to income ratio, but it's not as simple as total household debt to total household income.
Based on superficial measurements, Greenspan though the housing market was only becoming "frothy" when it was approaching the edge of a cliff in key areas, failure in any of which could spark a domino effect.
On the other hand, Steve Keen got a similar situation in Australia wrong and famously lost a bet.
So hard to tell if that's a good thing or a bad thing, though. If more people are taking on debt because their income has risen, then it's a good thing.
ReplyDeleteRight. The question is at what point the debt starts to become unsustainable. This is a function of debt to income ratio, but it's not as simple as total household debt to total household income.
ReplyDeleteBased on superficial measurements, Greenspan though the housing market was only becoming "frothy" when it was approaching the edge of a cliff in key areas, failure in any of which could spark a domino effect.
On the other hand, Steve Keen got a similar situation in Australia wrong and famously lost a bet.
I remember him making a bet, so he got it wrong, oh dear! All that maths and computer software, he's like a genius.
ReplyDelete