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Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

October 26, 2009

Private sector credit demand required to grow an economy

"From a technical perspective, the recession is very likely over at this point, but it's still going to feel like a very weak economy for some time." Ben Bernanke, September 2009

Green Shoots. What Green Shoots? Even Chairman Bernanke admits that signs that the North American economy has resumed growing are modest at best. In the US the bleak jobs picture shows that job hunters now outnumber openings six to one, the worst ratio since the government began tracking open positions.

A key feature of the Postwar North American economy has been the intimate relationship between credit growth and economic activity. It takes money to finance economic growth. Indeed, by late 2006 the available statistics showed that approximately six dollars of debt was needed to finance every one dollar expansion in the US GNP. The lesson is this: without growth in private sector credit demand, sustainable growth in the real economy cannot be maintained.

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