Good points Beet. I guess the problem with a lot of private debt, is that demand might decline sharply when folks refuse to further lend to the debt laden, or the debt laden default, and bring down financial institutions, which can slow the velocity of money, and cause losses to investors and creditors associated with such institutions.
Are there other problems with lots of private debt, or do I have my arms adequately around this matter?
Yes, the problems with private debt are well documented, and you have a good idea of what they are. But besides the absolute level of debt, there is also the problem of an economic model and structure where our growth as an economy is dependent on the rate of debt growing faster than the rate of the economy. This is where I appreciate some of the nuttier people Sam Spade cites, like Antal Fekete. Although I have yet to see the theoretical underpinning of Fekete's work, he does point out an empirical relationship that, in recent decades, more and more debt has been required for less and less growth. That cannot make anyone feel very good.
I am beginning to think we as a society have got our values all wrong. Everything is way too concentrated on money and material wealth, things like "GDP" and having the best economy and stock market. This kind of thinking is so entrenched in our society that I doubt it'll ever disappear, but I would hope people would look for their values elsewhere. I sound like a Christian conservative now...
Yes, indeed Beet, there is more to the quality of life than the size of the GDP. One thing Americans in general don't appreciate about Western Europe is that folks there may have a slighter lower standard of living overall, but they have more leisure time, and leisure time is a valuable commodity indeed! And one must also correct for negative or positive economic externalities, such as containing urban sprawl and land use controls, and that host of environment issues, including whatever merit there is in being concerned about CO2 emissions, etc.
I am kind of skeptical however that real economic per capita GDP numbers are slowing down. Over time, since well, 1830 or so, real per capita income has increased at around 1% per year. If in recent years, that has only been sustained by higher risk taking and leverage, than something else systemic must have changed.
