Depression? Is our economy going to need zoloft?
Posted by MC on Feb 7, 2010
A depression is almost always triggered by the deflation of excess credit. I guess my only question to the US government and banks is this…
HOW MUCH EXCESS CREDIT WILL YOU ENABLE AND FLOOD OUR SYSTEM WITH?
The bigger the bubble the more gum you get stuck to your face when it finally pops. Chew on that.
Americans are heavily burdened by credit that is NOT SELF LIQUIDATING. What does this mean? In basic terms it means that consumers live well beyond their means and take 6+ year car loans out and/or 50 year $0 down ARM mortgages. If you need a lengthy loan term YOU CANNOT AFFORD whatever you’re looking at!!! If you can’t afford 10-20% down on a house to start off with some positive equity in case of a downturn YOU CANNOT AFFORD it.
Self liquidating credit is quick to cycle and close. It’s the only type of credit that adds to the true value of an economy. By cycle I mean…production was facilitated by the creation of the loan…and therefore that loan generated the actual financial/economic return which makes repayment with interest possible. This illustrates TRUE economic growth, fundamentally.
