A state of excess credit in the economy is the precondition of debt-deflation. There has to have been an inflation of debt before it can deflate. The chart below shows the level of U.S. non-financial corporate debt as a percentage of gross domestic product (GDP). Back in 1951 it hovered around 22%, but has increased … Continue reading Could debt deflation be just around the corner?
Unfortunately, the Greater Recession led to a L-shaped recovery which may lead to a "Greater Depression" later in this decade owing to seven risky trends. The first trend concerns deficits and their corollary risks: debts and defaults. The policy response to the Covid-19 crisis entails a massive increase in fiscal deficits at a time when … Continue reading The trends that will lead us