Chris Martenson submitted an excellent article of an interview with John Mauldin on ZeroHedge regarding the “Debt Supercycle” which was a concept originally introduced in the 1930s by Irving Fisher. In a nutshell it means

  that when there is a buildup of too much debt within an economy, there reaches a point where there simply is no other available solution but to let it rewind.

According the Martenson the US has now reached that point where the debt supercycle has ended and needs to be paid off.

You can’t look to monetary policy for help (which will try to stimulate businesses to get more debt) because debt is the problem. If you are drunk and you need to cure yourself; another fifth of the whiskey is not the answer. So when debt becomes the problem, when it gets to be too much, more debt is not the issue. You’ve just simply got to work it off. There’s no easy way out of it. And, it takes years to work through it. It takes a long time, generally — 60 to 70 years, in the US’s case — for these debt cycles to build up. It’s when you can no longer adequately service your debt and the market loses confidence in your ability to service the debt at a price that it finds adequate.

Normally to deal with debt you can try to grow your way out, but

The problem is, when you’re at the end of the debt supercycle, when you’re running up against your ability to borrow money, that liquidity no longer works.

 ……
So you can either repudiate the debt, you can default on it, you can monetize it, you can try to grow your way out of it; but you’re going have to deal with it. And there’s no easy way, when you’re at the end of the debt supercycle, when debt has become too much. Printing money doesn’t work.
So Europe is already has gone too far according to Mauldin, Japan is nearly there and will have disastrous consequences when it finally falls and the US will suffer 5-6 years of very low growth. Bottom line is if debt is not caught early in the cycle, then there is no easy solution but to let it unwind. 

As Fisher pointed out, the time to solve the debt bubble is before it becomes a bubble. He was wanting separation of commercial banks and lending. He wanted a much less fractional-reserve-based banking because he wanted the debt to keep from building up past levels that we saw in the 1920’s. He saw that as something that was so bad that it created the Depression.

Unfortunately every time the business cycle was about to break down in the US, printing presses kicked in and along with low-interest rates there was always somebody there to buy the debt. Finally we are reaching that point where money printing no longer works, hence debt supercycle is reached.

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