The International Monetary Fund devotes two chapters of its latest Global Financial Stability Report to the issue of household debt and points out:
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- high household debt levels deepen and prolong economic recessions.
- US household debt is back at pre-Great recession levels hitting $12.84 trillion in the second quarter of 2017.The report offers this flowchart of the loops between debt, cash flow, demand and the economic cycle. See: Americans have more debt than ever–and it’s creating an economic trap.
Pretty common-sense stuff. Yet, widely ignored by the monetary policy of central banks everywhere.
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