Note it’s overwhelmingly mortgages – more so now than in 1999 – and those are backed by assets (a house!):
Mini de-leveraging so far
I suppose a bear might point out that this graph doesn’t highlight the debt taken out by people losing their homes from 2006 on. I’m not sure how that is taken into account.
It’s also not deflated, as far as I can see.
(Source: Infectious Greed)
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Lots of debt repayment there. Doesn’t that often lead to deflation?
Hi Richard. Well, to a point debt repayment is fine provided the economy is growing and the level can go up if consumers’ incomes are also increasing to cope with it.
The problem with respect to deflation would be more the de-leveraging situation, where consumers en masse reduced the size of their balance sheets (debts), by saving more rather than spending.