Saturday, December 29, 2012

Household's financial burden

Matt Franko, via Mike Norman, shows that household financial obligations as a share of disposable personal income is at almost the level of the early 1980s. Deleveraging has been accomplished to a great extent. In part, this results from the Fed's low interest rate policy. However, if wages do not go up, or government does not step up spending, then only another bubble will get the economy going. Hope it doesn't come to that.

I'm out of here (for a few days at any rate). Happy New Year to all!

2 comments:

  1. We need the Japanese figures on this to get a good handle on its significance. I might try to dig them up if I have time later today...

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  2. Interesting that, instead of discharging debt through bankruptcy, households can restrucutre their debt with low interest rates (reduce payments and extend the duration of payments).

    HSTCMDODNS/DSPI also paints a good picture of the most recent past and the present situation.

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Godley versus Tobin on Monetary Matters by Marc Lavoie

  The 4th Godley-Tobin Lecture given by Marc Lavoie, a co-author of Wynne Godley, and one of the leading Post Keynesian authors.