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Debt at any time in an economic cycle is a concern if it is growing at too rapid a rate. In bad economic cycles, debt growth is expected as a way of stimulating the economy back to health. That is why interest rates decline. This is done to encourage the creation of debt that, in theory, encourages re-energized growth.
But the real concern is the current accumulation of debt in what is supposed to be an economic recovery. Increased government debt, corporate debt and personal debt will not rear its ugly head for several more years. But when it does, it will feel as though the economy has fallen off the precipice. Accompanied by an overpriced market, these problems are simply being postponed as we have racked up the most expensive recovery in the history of modern economics. And that is a long term dark cloud. [ Close Window ] |