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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (55236)1/8/2001 11:19:19 AM
From: Oblomov  Read Replies (3) of 436258
 
Heinz-

While I agree that the ratios of debt and dollar trading volume to GDP are interesting (and currently quite ominous)statistics, I would point out that there is no economic necessity that these figures be less than or equal to one. GDP represents income, while both debt obligations and equities are components of net worth.

The ratio of household net worth to disposable income has increased from 5.03 to its current level of 6.04 in 5 years. This ratio topped out at 6.36 in 2000Q1. This figure hovered slightly below 5 for most of the post war period, although it dipped to 4.13 during the great inflation of the 70s. It finally broke decisively above 5 in 1995Q4- a point that I would say was the start of the equity/real estate bubble.
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