Grace, one of the reasons of the much larger increase in Aussie consumer and mortgage debt over the last 30 years is the larger increase in Aussie population compared to the US.
Did you actually look at the population figures or just assume the population there has been growing faster than the US? The population growth in the US and Australia are almost identical according to the population figures I just checked with the US having a slightly higher rate. A yearly rate of .92% for the US and .90% for Australia. If this has changed significantly over those 30 years, what year did population growth drop off in Australia?
In almost every 5-10 year time period you want to pick monetary figures show money supply growth, debt growth, mortgage debt, etc., in Australia is growing faster than the US.
Over the last five years, Australia M3 grew 58% compared to US 42%, in the last ten, Aussies added 158% as opposed to our 122%.
So if Elroy's supposition is correct, that a more vigilant Fed can stem the inflation of the money supply, then he has yet to prove that the RBA is actually having that effect.
A much more relevant figure is debt as a percentage of assets, or, even better, debt service as a percentage of income.
Yes, I agree. The US is remarkably consistent with total debt service (including mortgage debt) running between 10.79%-13.36%of disposable income and consumer debt service (debt pmts minus mortgage pmts) running between 6-8.5% of disposable income. It has been like this for decades. The percentage tends down during recessions and creeps up when people feel flush.
economagic.com
economagic.com
Debt to asset ratios and loan to value ratios are even more boringly predictable on a macro scale in the US. |
