The Decade(s) of Growth That Wasn’t

For the even mild Economic observer, these charts and the implications of each should be no big suprise.  However, seeing charts and hard data like this really puts things into perspective.  What I am getting at here is the tremendous “economic growth era” of the 90s was more or less a sham.  Look at the massive, exponential increase in private level debt from 1992 to 2006.  Not look at the massive increase in household wealth (and of couce Debt-to-Income ratios from 92 to 08).  The “good old times” of the 90s was nothing more than a massive debt binge.  Debt fueled consumption which spike asset values in stocks, bonds, housing, etc.  Again this should be no big suprise to anyone.

However, it does make you think of how tenuous our economy really is.  What is the actual foundation of the US economy?  If much of the greatest prolonged bull market of the 80s/90s was fueled by massive debt binge, how do we expect asset growth to come anything close to that in the future decades (other than of course going on another massive debt binge)?  Is it just me or our expectation for economic growth and similarly market growth way out of whack?  When exactly do we “pay the piper” for our borrowing binge?


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