When talking about debt, keep in mind that all our money is debt.
There is no money without an equal amount of debt. All debt created can be repaid by the money created in the same process.
One person saving money is equal to another person struggling to pay back debt. One person taking on debt is equal to another person being able to save money.
Is debt crippling the global economy? No, debt is running the global economy. It's the saving of money which dries up the lake of debt repayment. The problem is that those who can take on debt have money and those who need money have maxxed out their credit and cannot take on more debt. In total, we have a lack of new debt (=fresh money).
This thinking is exactly what's wrong right now.
Everything is debt and debt is a constant drain.
Debt wasn't running the economy, it was propping it up - consumption was increased by taking on debt.
That bs is in a death corner now - how long can you lower interest rates? Are you going to PAY people to take on more debt? Or force them to take it?
Would be nice if some dose of reality was brought in.
Do you understand that all paper money is generated by taking on debt?
What I can agree on is that there are different qualities of creditors - yet, the money they generate is traded equally.
Corporations have largely stopped taking on more debt. Usually lowered interest rates have helped here to stimulate growth by lowering the interest rate below the expected profits. But today corporations like Microsoft, Google and Apple, for example do not take on more debt. Instead, they hoard money.
Instead of stimulating growth by giving people more money e.g. through increasing the wages and forcing the companies to take on debt, we're doing it ass-backwards. The population goes into debt, student debt, credit card debt, consumption credit in addition to housing debt to prop up consumation. You are right. That method is not good and it stops working at some point.
You are wrong though, in that debt as such is what brought us into this situation. It is the wrong kind of debt growth which is being stimulated.
The government is already stepping in by taking on large sums of debt in order to keep the system running. How that will turn out is to be debated.
Well, I think we mostly agree. I don't think debt was the original issue ("what brought us into this situation").
What I personally think is that the whole debt-money creation is just a broken, arbitrary system that the world outgrew (Just like we outgrew classical mechanics - it was sufficient and then turned out to be incomplete)
How it will turn out? Painfully, because the assumptions are out of touch with reality. (cough Alan Greenspan cough)
More worthless money will be pushed in, rates will remain stuck (or go down!), more "busywork" nth order financial derivatives, the can will be a little further down the road.
There is no money without an equal amount of debt. All debt created can be repaid by the money created in the same process.
One person saving money is equal to another person struggling to pay back debt. One person taking on debt is equal to another person being able to save money.
Is debt crippling the global economy? No, debt is running the global economy. It's the saving of money which dries up the lake of debt repayment. The problem is that those who can take on debt have money and those who need money have maxxed out their credit and cannot take on more debt. In total, we have a lack of new debt (=fresh money).