High Debt &
Low Economic GrowthIn his latest letter, John Mauldin* refers to a McKinsey report on debt & economic growth .. quotes: "High debt levels, whether in the public or private sector, have historically placed a drag on growth and raised the risk of financial crises that spark deep economic recessions." .. thinks the imbalances in the world today are the result of massive increases in world debt & a misunderstanding about the use & consequences of debt - "Too much of the wrong kind of debt is going to be the central cause of the next investment crisis. As I highlighted in my February 24 letter, the right type of debt can be beneficial. However, as the McKinsey Report emphasizes - 'High debt levels, whether in the public or private sector, have historically placed a drag on growth and raised the risk of financial crises that spark deep economic recessions.'
Read that again. This isn’t the Mises Institute. This is #$%%*# McKinsey.
As establishment as it gets. And they are clearly echoed by the BIS, the central banker’s central bank. Unless this time is different, they are saying, the high levels of debt are the reason for slow growth in the developed world, a point we have highlighted for years. There is a point at which too much debt simply sucks the life out of an economy."
Click "Mauldin March 28" to download Mauldin's letter (may need to provide your email address), or hit "View Fullscreen" at the bottom next to the Scribd logo to enlarge viewing .. John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore