Friday, July 13, 2012

too much credit?

We often hear that one of America's great strengths is the depth of its financial markets. That's true to a point, but there are limits. A new study by the International Monetary Fund shows that rich countries hit a point "at which financial depth no longer contributes to increasing the efficiency of investment."

That point, they showed (link opens PDF file) this week, tends to hit when a country's private sector debt totals 80%-100% of gross domestic product. The United States hit that threshold two decades ago, and now chugs along at about double the level:

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