Executive Summary

• The case of the missing credit impulse
• The credit impulse is the worst it has been in recent history
• How the situation is deteriorating fast
• Why a credit impulse-driven recession is nigh

If you have not yet read Part 1: The Pin To Pop This Mother Of All Bubbles? available free to all readers, please click here to read it first.

The Case Of The Missing Credit Impulse

An enormous oversight of nearly every major economist is the role of debt in both fostering current growth and stealing from future growth. 

It seems like such a simple concept, and it’s one I covered in great detail back in 2008 in the original Crash Course, but it remains a mysterious oversight of most here in 2017.  The concept is easy enough; if I borrow money to increase my spending here today, it probably makes sense to take note of that if you're an economist responsible for tracking spending.

My debt-funded spending today is my lack of spending in the future when I pay down the debt. 

Professor Steve Keen has this topic nailed beautifully. Rather than recreate it, let me just pull from an interview we did with him back in November 2010:

Imagine a country with a nominal GDP of $1,000 billion, which is growing at 10 per cent per annum (real output is growing at 4 per cent p.a. and inflation is 6 per cent p.a.), and which has an aggregate private debt level of $1,250