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Credit Contraction Episodes
acting-man.com / MN Gordon / April 8, 2017
Approaching a Tipping Point
Taking the path of least resistance doesn’t always lead to places worth going. In fact, it often leads to places that are better to avoid. Repeatedly skipping work to sleep in and living off credit cards will eventually lead to the poorhouse.
The same holds true for monetary policy. In particular, cheap credit policies that favor short-term expediency have the effect of layering society up with an abundance of long-term mistakes. Artificially suppressed interest rates via central bank asset purchase schemes are not without consequences.
What’s more, once set in motion these consequences don’t stop until they’ve fully run their course. The booms of plentiful credit must always be followed by the busts of unserviceable debt. As more and more debt drifts into arrears the debt structure breaks down. Yet when the actual tipping point is crossed is often unclear until after the fact.
The post Credit Contraction Episodes appeared first on Silver For The People.
Source: http://silveristhenew.com/2017/04/08/credit-contraction-episodes/
