Think of debt as a tower. It can be built up and built up, and if juiced by central banks can be built up even more. But eventually the “tower” becomes too heavy and it collapses on itself in chaos and pain.
Credit is artificially cheap thanks to the Federal Reserve’s unwise experiments of the last 6 years. This cheap credit has filtered down to the consumer to some extent. But now prices are rising (also thanks to the Fed) and this cheap credit is being used by consumers just to make ends meet – again. (While at the same time feeding the rise in the price of consumer goods.)
About a third of student borrowers under age 35 are behind in their payments. An equal percent are living with their parents.
Rickards is a guy I listen to. This is an interesting talk.
Below is the moment where the USA took a huge wrong turn. This is where we detached from financial reality. This is where the fiat insanity truly began. It’s one of the most important moments in American history, and yet most Americans know little about it.
This is Richard Nixon making a mistake of colossal scale, and one which may in the end undermine the very economy he said he was trying to defend. The man is just truly a tragic figure.
What is Janet Yellen, new Fed chairman, really worried about?
We’ve said it many times here, and many others have said it before us in other places. Free markets are not typically the friend of big corporations with lots of market share, money, and friends in government. These companies are already fat and happy. Free markets and free prices allow new challengers to enter the marketplace. This brings prices down and quality up. Not what the fat firms want.
This is your “recovery” folks. Inspires confidence doesn’t it?