Thursday, September 24, 2009

The Credit is Shrinking!

No one is focusing on this. The expansion of our economy depended on the consumers willingness to go into debt. As the great boom continued, more of the expansion depended on credit, not on increasing wages and at the end it was almost all credit expansion. Consumers weren't earning more money. They were using credit and believed that their houses would continue to increase in value. Without all of this borrowing the economy would not have grown as much as it did. Now people have stopped borrowing and now consumer credit is shrinking, not growing. People are fed with up consuming and now are spending their disposable income on reducing debt.

So, our government has decided to borrow on our behalf. They borrow $1.7 trillion dollars and then announce, “Ok, the recession over.”

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