Monetary central planning is failing to achieve Keynesian “escape velocity” because it has deeply impaired the engines of capitalist enterprise. Nowhere is this more apparent than in the grotesque financialization of American business that has occurred since the 1980s. As usual, this deformation is rooted in the massive growth of debt carried by non-financial businesses.
As shown below, non-financial business debt (corporate and non-corporate) has increased by nearly 8X since 1982 or at almost double the growth rate of GDP. Accordingly, the ratio of total business debt to GDP has risen from 53% to 81% over the last 32 years.
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