Thomas Palley notes " this demand maintaining capacity of new borrowing has been increasingly undermined by the cumulative expansion of household indebtedness, because debt involves debtor households making interest payments to creditor households...over time the process of demand maintaining borrowing has the paradoxical effect of aggravating the underlying probelm of deteriorating income distribution. Unfortunately, even this process of deman maintaining borrowing must ultimately come to an end as households run into their debt ceilings. The end of this process can be temporarily delayed...Howevever, even this process of delay is fragile, because households may put a voluntary end to it when they realize the financial vulnerability to which they are exposing themselves. It is this feature, rather than the invasion of Iraq, that likely explains the onset of the recession of 1990.Once households run outof income to service existing debt and borrowing stops, the problem of maintaining demand becomes immediately apparent" Plenty of Nothing, p. 207
> * The voluntary quit rate in the U.S. is the highest in years; workers
> report jobs the easiest to find in the 20-some years the Conference Board
> has been asking the question as part of their consumer confidence survey.
It may still be that as workers run out of income to service existing
debt, they will be less likely to challenge employers even if they are
changing their masters more often.
>
> * The U.S. personal savings rate in 1997 was the lowest since 1939, and the
> rate seems to be falling further in 1998.
Is income paid off to creditors counted as savings?
best, rakesh