Money and Finance
- Bill Gross – February 2013 Investment Outlook: Most ‘medieval’
Link to: Most ‘Medieval’So for those of you who don’t live in Washington State or Colorado or others who are a little miffed at this example, let’s just put it this way. P/Es of 3 or P/Es of 15 or P/Es of 0 are intimately connected to the amount...
- Richard Duncan Quote
“In recent decades, the usefulness of the quantity theory of money as a tool for analyzing changes in the economy has broken down because the extraordinary expansion of credit has made money irrelevant in comparison. The money supply is no longer the...
- Richard Duncan Quotes
“Credit did more to the U.S. economy than make it grow. It also radically changed its composition. Credit allowed America to buy all the manufactured goods it desired from abroad and credit financed the procurement of services at home. It could be argued...
- 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...
- Richard Duncan Quote
“When the United States removed the gold backing from the dollar in 1968, the nature of money changed. The result was a proliferation of credit that not only transformed the size and structure of the U.S. economy but also brought about a transformation...
Money and Finance
Richard Duncan quote
Kyle Bass made a similar point to the quote below on page 5 of his latest letter.
“There is a limit to how much debt an economy can bear. That limit is determined by the economy’s ability to generate sufficient income to service the debt. Exhibit 3.18 helps put the relationship between credit and the economy into perspective. It shows the ratio of economic output (i.e., GDP) to total credit market debt in the United States. That ratio represents the return on credit. The sharp decline in the return on credit indicates that in recent decades, the economy has generated steadily less output per dollar borrowed. In other words, there has been a sharp decline in the marginal efficiency of credit. That decline reflects the extraordinary malinvestment that has occurred during the last three decades in particular. It also raises uncomfortable questions about how much more of the financial sector’s capital will be destroyed during the years ahead.”
“There is a limit to how much debt an economy can bear. That limit is determined by the economy’s ability to generate sufficient income to service the debt. Exhibit 3.18 helps put the relationship between credit and the economy into perspective. It shows the ratio of economic output (i.e., GDP) to total credit market debt in the United States. That ratio represents the return on credit. The sharp decline in the return on credit indicates that in recent decades, the economy has generated steadily less output per dollar borrowed. In other words, there has been a sharp decline in the marginal efficiency of credit. That decline reflects the extraordinary malinvestment that has occurred during the last three decades in particular. It also raises uncomfortable questions about how much more of the financial sector’s capital will be destroyed during the years ahead.”
–Richard Duncan, The New Depression
- Bill Gross – February 2013 Investment Outlook: Most ‘medieval’
Link to: Most ‘Medieval’So for those of you who don’t live in Washington State or Colorado or others who are a little miffed at this example, let’s just put it this way. P/Es of 3 or P/Es of 15 or P/Es of 0 are intimately connected to the amount...
- Richard Duncan Quote
“In recent decades, the usefulness of the quantity theory of money as a tool for analyzing changes in the economy has broken down because the extraordinary expansion of credit has made money irrelevant in comparison. The money supply is no longer the...
- Richard Duncan Quotes
“Credit did more to the U.S. economy than make it grow. It also radically changed its composition. Credit allowed America to buy all the manufactured goods it desired from abroad and credit financed the procurement of services at home. It could be argued...
- 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...
- Richard Duncan Quote
“When the United States removed the gold backing from the dollar in 1968, the nature of money changed. The result was a proliferation of credit that not only transformed the size and structure of the U.S. economy but also brought about a transformation...