The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Hawkmoon who wrote (104765)	9/2/2009 4:13:10 PM
From: Elroy Jetson	2 Recommendations Read Replies (1) of 110194

Spending borrowed money on consumption is robbing your future to pay for yesterday and today. We have now reached a point where indebted consumers and businesses need negative interest rates in order to take on additional debt. This is called being "zero bound". Assuming we are not stupid enough to attempt this, consumers and businesses must now pay for both today's consumption and investment and the debt which financed yesterday's consumption. This legacy of the profligacy since 1980 produces a sharp contraction in consumer and business spending. Some will attempt to feed this burden, while many others will will file for bankruptcy and submit to foreclosure. Only when the debt burden built up over the past 29 years is removed will the economy again become robust. The false demand created by living beyond your means kills economic growth and ultimately results in an economic depression. Both Juan Peron and Ronald Reagan believed differently, but both were wrong.

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