[OPE] Early Notes on the Present Crisis

From: Michael Perelman <michael@ecst.csuchico.edu>
Date: Mon Sep 15 2008 - 16:47:13 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
michael at ecst.csuchico.edu
Chico, CA 95929
fax 530-898-5901
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Received on Mon Sep 15 16:49:33 2008

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