Debt Limbo: How Low Most It Go?

[don]

Keen feels personal and corporate debt now stands at 260% GDP, having dropped from a high of 300%. To re-start the economy he feels it must fall closer to a 100% debt ratio . . .

http://www.debtdeflation.com/blogs/2...h-chris-caton/

limbo lower now . . .

how low . . . can you go . . .

[unlucky]

Re: Debt Limbo: How Low Most It Go?

Keen feels personal and corporate debt now stands at 260% GDP, having dropped from a high of 300%. To re-start the economy he feels it must fall closer to a 100% debt ratio . . .

Great interview. Keen hits the nail on the head with this response

CHRIS CATON: Can I just say that in the long run there’s no magic constancy between debt and GDP. For a start what you’re doing is dividing a stock…
STEVE KEEN: Oh please Chris don’t hit me with that one, that’s a silly comment because the people did the same thing about government debt and nobody ever whinges about that. It’s a blind spot neoclassical economists have about the level of private debt because they believe the private sector’s always rational, they’ve been through the biggest irrational bubble in history.

I'm amazed that "conventional" economists still haven't got the message about how vast amounts of private debt can be created in a totally irrational way. And about who has to foot the bill when it turns out that these debts are un-repayable...