“Personal expenditures in the past 15 months have been largely financed by borrowing,” said Wynne Godley, a Cambridge University economist who is affiliated with the Levy Institute at Bard College. “And even a reduction in the pace of debt creation will force people to start spending less, on a big scale.”
The government is borrowing massive amounts. The public is borrowing massive amounts. At this point we are so dependent on debt that even a reduction in the rate of new borrowing will smash the economy, but how long can the borrowing go on?
Update – Way more here.