Before I begin I need to explain the hart below.
Blue line is (Household Debt Service Payments as a Percent of Disposable Personal Income)
Red line is a combination of the following (Consumer Credit + Home Mortgages) divided by Disposable Personal Income. Thus (a+b)/c
First thing you will notice is that both lines were rising since 1980. Second thing you will notice that since 2008 both started to decline.
Servicing the debt has declined by 1/3 (Blue) and debt ratio has declined by 1/5 (Red).
Since 2014 when the deficit dropped below 3%, notice how both lines started to flatten out as did the stock market. Conclusion, only massive deficit spending could reverse these trends, monetary policy did very little dropping since the 80’s. Only Fiscal policy had a real impact in reversing these trends.
Next time someone says deficits are ruining America, show them this chart for fun, because they won’t except facts, math, data I can tell you that from now, based on my experience. Like I said just do it for fun.
Author
Jim Boukis