As we just noted a few minutes ago, the US is already on its way to solving the debt “crisis”.
Total debt to GDP — which includes private sector debt — has been falling for a couple of years now.
But that doesn’t actually mean the US is out of the woods, by any stretch.
Ron Greiss of TheChartStore.com sent in this chart, which puts our chart into some perspective.
While total credit market debt to GDP has indeed fallen (as shown in our chart), it’s still wildly above historical levels, which means that if the economy is going to get back towards anything approaching “normal” there’s TONS more deleveraging left to do.
This fits in with the general argument we’ve been putting forward: The crisis it not that we’re going to be Greece. The crisis is that we’re going to enter years and years of horrible growth thanks to the unburdening of all this debt. People recognise that sky high debt levels are a problem, but the tunnel-visioned focus on US Federal debt (as though our situation is anything like Greece’s) is misplaced.
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