Debt Saturation in the US Dollar Economy
Courtesy of Jesse’s Café Américain
The debt must be liquidated and income in the form of real wages must increase to bring this relationship back into balance.
This is going to be a dangerous path for the US monetary authority to tread, because a misstep will lead to an inflationary spiral that will surprise most economists as did the stagflation of the 1970’s, which up until that point was considered to be almost impossible according to the prevailing theory of that day.
The financial engineers will keep at this until they hit they wall. If we were not in the car with them it might be a more interesting exercise to observe. The answer of course is to get out of the car as best you can.
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Chart from Nathan’s Economic Edge
