Hi Tejek, the chart does include govt debt according to this information from another poster:
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home.pacbell.net
"As it says, "Total Credit Market Debt - All Sectors"
If you break it out into three charts: Consumer, Business, Government
all three charts look fairly similar, though Business and Consumer debt has grown faster than government debt.
Combining the 3 charts makes the chart more stable as the Business and Consumer debt tend to grow the most when Government debt grows the least and the reverse.
The basic problem is Monetarism increases the money supply through debt creation. It all seems like magic until income can no longer support the debt service. We now have too much debt. Greenspan fixed that by lowering rates which means people can borrow more.
More debt should mean higher rates, but Greenspan fixed that by creating money out of thin air primarily through the central banks of Japan and China.
Ultimately, you cannot fix a problem of "too much debt" by adding more debt. This familiar chart is the big problem.
Also, consider the following time-line:
Fed Chairman, Arthur Burns _ 1970-1978
Oil Embargo 1973 and inflation gets dramatically worse each year.
Fed Chairman, Paul Volker __ 1978-1987
Fed increases interest rates dramatically and inflation stops
Fed Chairman, Alan Greenspan 1987-now
Stock market crashes in 1987 followed by Financial Bubbles, stock market wipe-out in 2000 and now other economic mayhem.
The Prime Rate over this period:
home.pacbell.net
"Read some comments by Paul Volker, a man who knew how to run the Fed wisely."
pbs.org.
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Also,
financialsense.com |
