Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

March 7, 2018 | How Paying Off Debt is “Recessionary”

Hilliard MacBeth

Author of "When the Bubble Bursts: Surviving the Canadian Real Estate Crash"

BC’s new irritant for Albertans

Listen to Podcast:

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

Archives March 7th, 2018

Posted In: HoweStreet.com Radio

3 Comments

  • Willy2 says:

    – Mr. MacBeth is too optimistic.
    – Reducing debt is indeed “recessionary”. But it’s more complicated than that. Professor Steve Keen’s work has shown that. Mr. Keen has a very simple formula: “Aggregate demand = income + change in debt”. If “Income” stays flat and the “change in debt” falls but still grows then that’s already enough to cause a “recession”. Then “aggregate demand” will drop as well. Just imagine that when e.g. canadians – on a net – start to pay down/reduce their debt. Then “change in debt” will turn negative and that’s even MORE “recessionary” for an economy (e.g. the canadian economy).
    – Using the formula above mr. Keen was able to pinpoint the month when Australia (Mr. Keen lived in Australia his entire life up to say the year say 2015) entered the recession in 2007. December 2007 was the 1st month of the recession of the australian economy.
    – Using the same formula he was able to show that the “Great recession” of 2007/2008 actually started NOT in late 2007 but already in early 2005. Already in 2005 and 2006 the “change in debt” started to fall slowly (!!!). But in late 2007 that “change in debt” started to fall much faster. And the rest is history.
    – I am surprised that mr. MacBeth isn’t aware of this. Because I know he read – at least – one of mr. Keen’s books .
    https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926

    (Please send this comment also to Mr. Macbeth. perhaps he wants to reply ??)

    • Hilliard says:

      I am very aware of Steve keen and i agree with his analysis and your recap. It’s just too much to get into in a radio interview. There will be time after the recession and the financial crisis that it will trigger to discuss that. Hilliard

  • Willy2 says:

    – I should have written: the “Great US Recession” in my previous reply.

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.