Thank you for your ‘perspective’ Alfonso…. Your focus on ‘private’ debt is a good choice. My thought is that we are best served in this case, to not consider the ‘economy as a machine’ and ‘broke’, but rather as a ‘garden’ that is in need of ‘tending’. “Emergence”, I believe, is better concept to aid in increasing our understanding of ‘how Our world works’.
Alfonso, you and your readers may want to take a look at the NYT article (5-14): “High Interest Rates are Hitting Poorer Americans Hardest”. Please, no more “mechanics”.
Like Yogi said, “We’re lost, but we’re making good time.” ~ Coach
Another factor preventing the US economy from breaking is the stimulus created by the public sector debt, which manifests in various ways, some of which are counter intuitive:
a) Continual govt spending (Chips Act, Guns and Bombs, Medicare etc)
b) Wealth effect from high asset prices, and
c) the stymmie checks disguised as interest payments to UST holders.
Sir Alf, you have explained how the debt service ratio will eventually hurt the real economy if Higher-4-Longer continues. Can you comment on where this collective juicing leads us under the same regime?
So Pavlov’s dogs expectations of Fed rate cuts exceed expectations of inflation measures over the next year, and markets stay Fatter and Happier for longer :) What could possibly alter this perspective ? :)
Thanks Alf. What happens when we include financial private credit? That's an area that has been ballooning (>$2Trillion) over the last ten years, and most of this debt is floating rate.
Germany, Italy, Japan traditionally have low private sector debt but their economies have not certainly over performed. Actually Germany has low leverage at all levels (and this is why they run structural trade surpluses) but it is probably the economy with the biggest issues in the western world.
Yes, our debt structure will prevent any quick rationalization of interest rates and resource reallocation. This is not necessarily a good thing because it hampers productivity, though it looks good for now for US$ asset holders.
Raymo here.
Thank you for your ‘perspective’ Alfonso…. Your focus on ‘private’ debt is a good choice. My thought is that we are best served in this case, to not consider the ‘economy as a machine’ and ‘broke’, but rather as a ‘garden’ that is in need of ‘tending’. “Emergence”, I believe, is better concept to aid in increasing our understanding of ‘how Our world works’.
Alfonso, you and your readers may want to take a look at the NYT article (5-14): “High Interest Rates are Hitting Poorer Americans Hardest”. Please, no more “mechanics”.
Like Yogi said, “We’re lost, but we’re making good time.” ~ Coach
needs more inverted commas
Very interesting ! thanks a lot :-)
Very informative, thanks Alf
Another factor preventing the US economy from breaking is the stimulus created by the public sector debt, which manifests in various ways, some of which are counter intuitive:
a) Continual govt spending (Chips Act, Guns and Bombs, Medicare etc)
b) Wealth effect from high asset prices, and
c) the stymmie checks disguised as interest payments to UST holders.
Sir Alf, you have explained how the debt service ratio will eventually hurt the real economy if Higher-4-Longer continues. Can you comment on where this collective juicing leads us under the same regime?
So Pavlov’s dogs expectations of Fed rate cuts exceed expectations of inflation measures over the next year, and markets stay Fatter and Happier for longer :) What could possibly alter this perspective ? :)
very interesting,fair¡¡¡¡¡¡¡¡
Higher for longer. Time will tell
Thanks Alf. What happens when we include financial private credit? That's an area that has been ballooning (>$2Trillion) over the last ten years, and most of this debt is floating rate.
Great content. Cheers
Germany, Italy, Japan traditionally have low private sector debt but their economies have not certainly over performed. Actually Germany has low leverage at all levels (and this is why they run structural trade surpluses) but it is probably the economy with the biggest issues in the western world.
Yes, our debt structure will prevent any quick rationalization of interest rates and resource reallocation. This is not necessarily a good thing because it hampers productivity, though it looks good for now for US$ asset holders.