Antonio Fatas says "the world has no (net) debt. For every liability there is an asset."
The world also has no net wage cost. For every dollar of wages paid, a dollar of wages is received. Does this mean that we could increase wages 9% a year (like private nonfinancial debt) or even 14% a year (like financial business debt) and it would have no harmful effect on the economy? Of course not. The "no net wages" argument is nonsense.
The "no net debt" argument is just as bad.
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Actually for every financial dollar liability there is a lot more financial dollar assets.
https://fred.stlouisfed.org/series/TNWBSHNO
Which I see as too much purchasing power is chasing too few assets.
Both you and Jim can be correct at different times on if private debt is bad or good.
Bank loans are additive to the amount of purchasing power that’s already occurring, and therefore, flow directly into GDP. They might boost real growth or inflation, or both, depending on a variety of factors including how the loan is spent.
I myself focus on whether too much purchasing power is chasing too few goods, or, in the case of disinflation, whether too little purchasing power is chasing too many goods.
Remember inflation in the price of assets is wealth.
"Bank loans are additive to the amount of purchasing power that’s already occurring, and therefore, flow directly into GDP."
Yes. Interesting 3-part article on this, at zero hedge. Here is part 1:
https://www.zerohedge.com/news/2018-02-18/key-inflation-indicator-watch-part-1
Part 2:
https://www.zerohedge.com/news/2018-02-26/key-inflation-indicator-watch-part-2
Part 3 I didn't see yet.
Yes they are I put together his inflation indicator works pretty good.
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