Debt Surge Producing Fake Recovery – 01.08.17


  • What do the following headlines have in common?
  • US wages grow at fastest pace since 2009
  • Euro area economy ended year with strongest growth since 2011
  • Surge in home prices is beating the one in mortgage rates
  • Manufacturing in U.S. Expands at Fastest Pace in Two Years
  • German Inflation welcomed back
  • Obviously they’re all favorable, with the possible exception of German inflation – though even that is “welcome”. Taken together they paint a picture of a global economy that’s finally returning to the kind of solid growth and steady, positive inflation that most people consider both normal and good.
  • Unfortunately, the reason for the improvement is emphatically not good: In 2016 the world borrowed a huge amount of money and spent the proceeds. The result is “growth,” but not sustainable growth.

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