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Group stink

By Vern Gowdie - posted Monday, 26 August 2019

FRED - Effective Federal Funds Rate - 15-08-19

Source: Federal Reserve Economic Data

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Give me a break.

Paul Volcker (the three Amigos predecessor) was the one who took the really difficult decisions. Volcker raised rates from 5% to 20% (in the face of enormous political pressure) to crack inflation.

Volcker paved the way for his successors to embark on a ‘low rate, high debt’ growth policy…and oh what a success that’s been.

Total US debt (from all sectors) has risen from US$4.4 trillion in 1980 to US$72 trillion…an almost 18-fold increase.

FRED - All sectors; debt securities and loans; liability, level - 15-08-19

Source: Federal Reserve Economic Data

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What impact did all this debt have on the economy?

In 1980, US GDP was US$2.8 trillion.

Today, it’s a touch over US$20 trillion

FRED - Gross DOmestic Product - 15-08-19

Source: Federal Reserve Economic Data

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This article was first published in The Rum Rebellion.

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About the Author

Vern Gowdie has been involved in financial planning since 1986. In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.
His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors to protect their own and their family’s wealth. Follow him on Twitter @RumRebellionAus