Chart of the day: US household debt-to-income versus debt servicing cost ratios

Here's a great chart from Goldman Sachs that I spied as a result of a tweet by finance blogger Conor Sen who is someone to follow on Twitter. It shows the divergence in US household debt-to-income ratios and debt servicing costs as interest rates have declined. In my view this divergence has significant implications.

This is a big issue for me because it highlights my beef with mainstream policy frameworks and their lack of regard for debt and credit aggregates or financial system fragility. Andrew Haldane of the Bank of England voiced disquiet about this recently.

Cycles in money and bank credit are familiar from centuries past. And yet, for perhaps a generation, the symptoms of this old virus were left untreated. That neglect allowed the infection to spread from the financial system to...


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