ProfSteveKeen | Debt Payment: A Path to Collapse @ProfSteveKeen | Uploaded September 2024 | Updated October 2024, 3 hours ago.
The more debtors pay, the more they owe.
This isn't just a catchy phrase.
It's a harsh reality.
Imagine trying to fill a bucket with holes.
You pour in water, but it keeps leaking out.
That's what happens when debtors try to pay off their debts in a deflationary environment.
Each dollar they pay back becomes worth more.
So, while they might reduce the number of dollars owed, the value of what remains skyrockets.
It's like running on a treadmill set to a steep incline.
You might be moving, but you're not getting anywhere.
This phenomenon, highlighted by Irving Fisher, is a ticking time bomb for economies.
When debt levels rise, and prices fall, the real burden of debt increases.
It's a vicious cycle.
The more you pay, the more you owe.
This isn't just theory; it's history.
The Great Depression serves as a stark reminder.
During that time, as people tried to pay off debts, the economy collapsed under the weight of rising real debt.
We can't ignore this.
If we continue down this path, we're setting ourselves up for repeated crises.
Instead, we need a radical shift in our approach to debt.
We should focus on reducing private debt to stabilize the economy.
This means recognizing that debt isn't just a number on a balance sheet.
It's a living, breathing entity that affects real lives.
Ignoring this reality will lead to more economic disasters.
We must learn from the past.
Debt reduction isn't just a financial strategy; it's a necessity for a stable future.
Let's not wait for the next crisis to realize this.
The time to act is now.
The more debtors pay, the more they owe.
This isn't just a catchy phrase.
It's a harsh reality.
Imagine trying to fill a bucket with holes.
You pour in water, but it keeps leaking out.
That's what happens when debtors try to pay off their debts in a deflationary environment.
Each dollar they pay back becomes worth more.
So, while they might reduce the number of dollars owed, the value of what remains skyrockets.
It's like running on a treadmill set to a steep incline.
You might be moving, but you're not getting anywhere.
This phenomenon, highlighted by Irving Fisher, is a ticking time bomb for economies.
When debt levels rise, and prices fall, the real burden of debt increases.
It's a vicious cycle.
The more you pay, the more you owe.
This isn't just theory; it's history.
The Great Depression serves as a stark reminder.
During that time, as people tried to pay off debts, the economy collapsed under the weight of rising real debt.
We can't ignore this.
If we continue down this path, we're setting ourselves up for repeated crises.
Instead, we need a radical shift in our approach to debt.
We should focus on reducing private debt to stabilize the economy.
This means recognizing that debt isn't just a number on a balance sheet.
It's a living, breathing entity that affects real lives.
Ignoring this reality will lead to more economic disasters.
We must learn from the past.
Debt reduction isn't just a financial strategy; it's a necessity for a stable future.
Let's not wait for the next crisis to realize this.
The time to act is now.
