Hoisington Q1 2012 Letter
The standard of living of the average American continues to fall. Real median household income today is near the same level as it was fifteen years ago, a remarkable statistic since the debt to GDP ratio is 100 points higher (Chart 1). The cause of this deterioration in living standards can be traced to the excessive accumulation of debt, as well as the debt proportion that has turned increasingly unproductive, or even counterproductive. When debt is utilized to finance nonproductive assets, an economic process is initiated that undermines prosperity. Productivity gains must be generated in order to boost income, and thereby the standard of living. If debt enhances productivity, incomes will expand and the economic pie will be enlarged. Otherwise, the debt increase exercise is debilitating to economic growth.
- Richard Duncan Quotes
Another longer excerpt from The New Depression (taken from my Kindle highlights, so the excerpts aren’t necessarily the paragraphs I have put them in below, and there may be things in between that I didn’t highlight). I've been posting a lot of...
- Gr-neam Reflections: 07/01/2012 - Long Journey, Map Provided
Debt reduction in advanced economies will persist for years, but is underway in a number of cases. The latest data on the U.S. household sector confirms our long standing assessment that growth is essential to reducing debt loads relative to incomes....
- Straight Talk With Steve Keen: It's All About The Debt
Economic activity—and hence employment—is thus determined not merely by the level of production and incomes, but also by changes in the level of debt. This generates credit-driven cycles that can occur even if debt is still growing, simply if the...
- Frbsf Economic Letter: U.s. Household Deleveraging And Future Consumption Growth
Thanks to Matt and Mike for passing this along. It seems the deleveraging process may take longer and be more painful than most people think (and certainly longer and more painful than much of the media portrays…..surprise, surprise). U.S. household...
- 2012 Goals
My ultimate goal is to be able to retire by 40 by replacing all of my income with dividend payouts. I have a long ways to go but am working on making progress towards it. Budgeting goals for 2012: Average 70% after-tax savings rate Average less than...