History suggests: This won’t end well.


Some economists maintain that this buildup in private debt is not a concern, because for every borrower there is a lender and therefore it all balances out. This view ignores the fact that the vast majority of lending is made by a very small handful of large institutions whose increased consumption is unlikely to match the decreased consumption of overburdened borrowers, especially in the same period as that decreased consumption. Instead, their consumption is more likely to appear as retained earnings for those institutions. Further, this view ignores the disproportionate burden of this debt on middle- and lower-income groups, the very ones we depend on to power growth.

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Richard Vague — Democracy

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