The Debt-Credit-Value Relationship is Broken (Market Ticker)

The error in the premise is that borrowing has to pick up but we never destroyed the excessive debt leverage that was in the system originally.  As such there is no borrowing capacity - recall that one must have both a willing lender and a willing and able borrower.

See What $1.6 Trillion In Deficits Buys?

Funny how the numbers seem to line up:

Real disposable income decreased 0.6 percent in January, in contrast to an increase of 0.2 percent in December.  Real PCE increased 0.3 percent, compared with an increase of 0.1 percent.

Yeah, we're not making anything in actual income, but the government is forking up billions in things like unemployment and such.

The fun part of this, of course, is that the only thing that has held up the economy is that deficit spending.  But for it, as I noted in my missive of Feb 23, we've borrowed and spent 14% of GDP over the last 18 months - or roughly 10% annualized.

The premise behind all of this is that if you can "prime the pump" it will lead to sustainable growth.

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