Summary: The effects of debt are among the most widely misunderstood factors of macroeconomics. The almost delusional writings of perma-bears and conservatives have demonized debt, while economists often regard high debt levels with complacency. Yet economists have learned much about dynamics of debt. This post looks at this cutting edge of economic theory, very relevant to us today — because the debt supercycle is the story of modern America, and it’s over. First of 2 posts today.
“In final examinations {this economics} professor always posed the same questions. When he was asked how his students could possibly fail the test, he replied simply ‘Well it is true that the questions do not change, but the answers do.’
— From a speech by Fed Chairman William McChesney Martin Jr., 19 October 1955.