Thursday, August 23, 2007
Debt, debt and more debt.
Wow, we already passed the point where we have more debt than the size of our economy (some time ago, I didn't realise that). This just goes to show that a number of people here may be right when they say that, not only must asset prices (houses) go down, but debt destruction must also occur. Of course, this can occur by a reduction in value or by inflation. We have a choice and it seems that banks would prefer inflation at present, with all the liquidity they are feeding the system.