The Phaserl


Is This What They Mean By “Crack-Up Boom”?

by John Rubino, Dollar Collapse:

In 1980, the US government – along with pretty much all of its peers – began borrowing at an accelerating rate. Note on the following chart how the trend line steepened in the 2000s and then steepened again in this decade, with a sudden and unexpected pop in 2015 and early 2016, even as the current recovery entered its 8th year.

Also in the past year, stock prices have risen from “near-record, overvalued-by-every-historical-measure” levels, to “new-record, grossly-overvalued” levels – and show no signs of slowing down. Note the massive jump in S&P 500 trading volume that began in January and has persisted throughout the year.

Investors, meanwhile, are borrowing to snag more of those apparently-easy profits, with margin debt — money borrowed against stock portfolios to buy more shares — now above both 1999 and 2007 levels.

And now consumers are joining the party:

U.S. Households Ramp Up Borrowing Led by Mortgages, Credit Cards

(Bloomberg) – U.S. households increased their borrowing in the final three months of 2016 at the fastest pace in three years, according to the Federal Reserve Bank of New York.

Consumer debt rose by $226 billion, or 1.8 percent, in the fourth quarter, led by a $130 billion increase in mortgage loan balances and a $32 billion increase in credit-card borrowings, the New York Fed said Thursday. The rise brought total consumer debt to $12.58 trillion, just shy of the $12.68 trillion peak in the third quarter of 2008.

New mortgages originated totaled $617 billion, marking the biggest three months for volumes since the third quarter of 2007.

“Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt,” Wilbert van der Klaauw, a senior vice president at the New York Fed, said in a press release.

Student loan balances rose to a new record high of $1.31 trillion, and auto loan debt also increased to a record $1.16 trillion in the 18-year history of this data series.

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4 comments to Is This What They Mean By “Crack-Up Boom”?

  • Ed_B

    “… even as the current recovery entered its 8th year.”

    Recovery? WHAT recovery? All we have seen in inflation not growth and a lot of that IS in the stock market. Like everything else we see, this is all rigged to make those in power look better than they are and to appear to have policies that are working. They don’t. This is all just a lot of money printing and borrowing to paper over the cracks in our economic foundation. This is the sort of thing that works until it doesn’t and then there is a horrific crash that would have been MUCH smaller had it been allowed to happen years before it finally did.

    For some reason, both the Fed and the US Gov have gotten it into their heads that recessions are bad. No, they are not. They are necessary. This is how the economy takes a dump, flushing away bad investments, poor management choices, and lousy resource acquisition and distribution. By putting these off for years and years, the stage is being set for a huge depression that may well bring down the US and world economies. This is what happens when idiot Keynesians are given the power to test their college theories in the real world. The truly sad part of all this is that it is not the ones making these idiot decisions who will suffer the most. We the People will do most of that… while they run along and try something else that is equally idiotic and prone to fail.

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