[OPE] Early notes on the present crisis

From: Michael Perelman <michael@ecst.csuchico.edu>
Date: Mon Sep 15 2008 - 13:45:37 EDT

About 10 years ago, Riccardo Bellofiori suggested that I write something about the US
economy for an Italian magazine. I put together a couple notes but never followed
through on it. By accident, I just came upon the notes that I showed him, which
seem relatively timely today:

Debt has been the chief force keeping the U.S. economy afloat. Consumers are
accumulating debt. The nation is accumulating debt. Corporations are shedding debt.
The result is financial fragility.

The current balance deficit requires that other countries continue, in effect, to
absorb dollars or other U.S. financial assets.

Doubts about the U.S.'s ability to make good on its debts could set off a serious
deflation, making debt burdens become unbearable.

Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
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Received on Mon Sep 15 13:47:58 2008

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