How A Debt-Driven Economy Creates More Frequent Crises

At the same time, periods of crisis are less aggressive albeit more frequent than prior to 1975.

Another interesting evidence of the crises and recoveries since 1975 is that almost all economies end the recession period with more debt than before.

Global debt has ballooned to all-time highs, more than three times the world gross domestic product.

For decades, governments and central banks have always identified the problems of the economy as demand problems, even if it was not the case.

Debt is not a problem when it serves its purpose, which is to finance productive investment and allow the economy to grow, while efficiency, innovation, and technology allow us to be more productive and receive more and better goods and services at cheaper prices.

The more we hear from governments that we need to spend more and save less, the weaker the response from economic agents.

Promoting a debt-driven economy leads to more frequent crises, shorter economic cycles and abrupt recessions.

https://mises.org/wire/everything-bubble-how-debt-driven-economy-creates-more-frequent-crises