The Death of Demand – The Post-Consumer Debt Economy
by Charles Hugh Smith
Keynesians claim more debt will goose “demand;” they’re wrong. Boosting debt has distorted the economy for 40 years, and the end-game is finally approaching.
Keynesians are constantly demanding more debt be taken on to spark “demand” for more stuff. What if debt-fueled demand is dead, expired of natural causes? If so, then the Keynesians are pushing on a string.
The truth is the U.S. has long been a post-consumer economy. Everybody already had a TV, phone, car, etc. 40 years ago, which is coincidentally when wages began their 40-year stagnation and the nation’s public and private debts began exploding higher as the forces of financialization took over.
In other words, the only way to get people to buy more crap was to give them vast quantities of debt.
Now that debts exceed 350% of the nation’s GDP, we’ve reached the end of the financialization process: we can’t afford any more debt unless the interest rate is near-zero.