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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