Login

Is This What They Mean By “Crack-Up Boom”?

Share on Facebook Tweet on Twitter

Posted by John Rubino - DollarCollapse.com

on Thursday, 16 February 2017 13:15

In 1980, the US government - along with pretty much all of its peers - began borrowing at an accelerating rate. Note on the following chart how the trend line steepened in the 2000s and then steepened again in this decade, with a sudden and unexpected pop in 2015 and early 2016, even as the current recovery entered its 8th year.

US-fed-debt-Feb-17

Also in the past year, stock prices have risen from "near-record, overvalued-by-every-historical-measure" levels, to "new-record, grossly-overvalued" levels - and show no signs of slowing down. Note the massive jump in S&P 500 trading volume that began in January and has persisted throughout the year.

 S&P500 Daily Chart

Investors, meanwhile, are borrowing to snag more of those apparently-easy profits, with margin debt — money borrowed against stock portfolios to buy more shares — now above both 1999 and 2007 levels.And now consumers are joining the party:

43722 c

U.S. Households Ramp Up Borrowing Led by Mortgages, Credit Cards

(Bloomberg) - U.S. households increased their borrowing in the final three months of 2016 at the fastest pace in three years, according to the Federal Reserve Bank of New York.

Consumer debt rose by $226 billion, or 1.8 percent, in the fourth quarter, led by a $130 billion increase in mortgage loan balances and a $32 billion increase in credit-card borrowings, the New York Fed said Thursday. The rise brought total consumer debt to $12.58 trillion, just shy of the $12.68 trillion peak in the third quarter of 2008.

US Credit Card Balances

New mortgages originated totaled $617 billion, marking the biggest three months for volumes since the third quarter of 2007.

"Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt," Wilbert van der Klaauw, a senior vice president at the New York Fed, said in a press release.

Student loan balances rose to a new record high of $1.31 trillion, and auto loan debt also increased to a record $1.16 trillion in the 18-year history of this data series.

This is clearly a credit-driven boom of some sort. But is it the long-awaited Austrian School of Economics "crack-up boom", the exclamation point at the end of especially-frenzied and broad-based financial bubbles? That may be a question answerable only in retrospect. But when the crack-up boom finally hits, this acceleration across multiple sectors is how it will look and feel.

...more at Dollarcollapse.com

 

 

 


Free Subscription Service - sign up today!

Exclusive content sent directly to your Inbox

  • What Mike's Reading

    His top research pick

  • Numbers You Should Know

    Weekly astonishing statistics

  • Quote of the Week

    Wisdom from the World

  • Top 5 Articles

    Most Popular postings

Learn more...



Our Premium Service:
The Inside Edge on Making Money

Latest Update

A Buffet of Buy Recommendations

Notes From Michael - June 28th The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety)...

- posted by Michael Campbell

Michael Campbell Robert Zurrer
Tyler Bollhorn Eric Coffin Jack Crooks Patrick Ceresna
Ozzie Jurock Mark Leibovit Greg Weldon Ryan Irvine