Debt addiction, USA: How much debt reduction has the crisis caused?

by Detlev S Schlichter, Financial Sense:

The purpose of this essay is to put the latest crisis in the context of longer-term debt trends in the US and to attempt some predictions in respect to the US economy and financial markets.

Statistics are records of past events. Analyzing statistics means interpreting history, and this can only be done on the basis of theory. We must first have some theoretical notions to be able to render past events intelligible. Of course, historic data cannot be in conflict with the theory used, as that would put the validity of the latter in doubt. But we can neither use statistics to prove the correctness of a theory nor directly discover new theories (although history may give us ideas about potential theories). Before we look at the data I should give a brief outline of my theory, which readers of my book?Paper Money Collapse?will be familiar with.

The theory ? short version

Paper Money Collapse?challenges the prevailing consensus on money. This consensus holds that it is good to have something called ?monetary policy?. Most mainstream economists today, while accepting the superiority of markets when it comes to allocating scarce resources to their most urgent uses, also maintain that in the field of money state involvement is desirable, and that a smoothly functioning economy requires a constantly expanding supply of state paper money and the guidance (manipulation) of certain market prices (interest rates) by a central bureaucracy, i.e. the central bank.

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Source: http://sgtreport.com/2013/03/debt-addiction-usa-how-much-debt-reduction-has-the-crisis-caused/

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