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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (51746)12/28/2000 1:07:20 PM
From: Mike M2  Read Replies (1) of 436258
 
Heinz, with respect to the credit/ GDP growth ratio. I have seen others refer to the fact that this ratio has increased over the past few decades and then infer that more credit is required to sustain GDP growth. It peaked at 2.2/1 in 1929. That may be true to some extent but I feel that the current ratio is more indicative of the fact that much of the credit creation is used for leverage and speculation rather than productive purposes. They are simply inflating the claims on existing wealth ( productive capacity) rather than create new wealth. One critical point overlooked by many is that credit used for productive purposes is self financing -assuming there is no malinvestment but when credit is used for leverage or consumption you are on the road to ruin ( TL & EV). mike ho ho ho
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