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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (19826)12/29/2004 2:39:12 PM
From: Rational  Read Replies (2) of 116555
 
True, the $10 trillion debt has been borrowed by "consumers." But the rich have lent this sum. Among the rich are media barons who are worried.

Even if "foreigners" are excluded from that sum borrowed by U.S. households, we still have $7.5 trillion of debt lent by domestic money lords. This sum has to shrink when household income is declining.

The Fed has no way of tinkering any further to help the money lords. If the Fed raises interest rate to "fight" inflation, consumer demand and economy will slump and money lords will suffer. If the Fed keeps rates low, the negative real rate of interest will slowly consume the worth of money lords.

Money lords have therefore gone massively to real estate and they will likely enter stocks too because value of debt will decline dramatically.
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