Three notes: three benefits of massive debt–and why it will not choke growth or higher wages, or expanding prosperity.
1. US debt serves a global currency reserve and dampens global shocks and stabilizes markets, including the Hang Seng, Nikkei, Shanghai, DAC, CDC, and Mexico’s Bolsa. It stabilizes currency exchange rates and the banking system as well.
2. Debt is an instrument of future growth. Pension funds (public and private) depend on investments in debt to meet their future obligations; retirees are not paid from future profits, but from long-horizon returns on investments in debt and equity.
3. Debt creates micro-mobility. Whether buying a house or starting a business, families use debt to get ahead.
This concern Peterson has with debt is a Chicken Little cry (Interest rates are equally or more important! As is how the debt is used!) China’s massive One Belt, One Road, trillion dollar+ project is assuming massive debt, but it will repay its costs many times over by connecting 60 Asian/African/European countries in an efficient, low cost, secure infrastructure of modern global market–and expand their 60% share of global GDP as the global middle class expands by a billion people! By 2030.
A myopic view of debt digs a deeper hole than the money owed; more attention should be paid to its dynamics, purposes and context.
Ignoring the Debt Problem http://nyti.ms/2erEaEK