More evidence that the current weak economic expansion is driven by asset inflation, which allows households to use more leverage
NOT more income. This "wealth effect" occurred before the last financial crisis of 2008 too.
See Aikman, Bridges, Kashyap, and Siegert (2018) Household debt is at a post-war high. Personal savings are trending in the opposite direction:
Societe Generale, the French mega-bank, predicts in its latest Global Economic Outlook that the US is headed towards another recession in 2019/2020. Here is the chart:
Government spending in August soared to $433.3 billion, not only 30% higher than a year ago, but the highest government monthly outlay of any month on record. Government tax receipts shrank; notably revenue from corporate taxes shrank by $3bn in August. Meanwhile, interest on the public debt reached an all time high of $538 billion in Q2, 2018. Even Jamie Dimon, that prince of finance capitalism, thinks another collapse is coming. Leon Trotsky wrote: “The orientation of the mass is determined first by
the objective conditions of decaying capitalism, and second, by the
treacherous policies of the old workers’ organizations. [such as the Auto Workers support of the federal bailout of Chrysler and GM in 2008] Of these
factors, the first, of course, is the decisive one: the laws of history
are stronger than the bureaucratic apparatus.”
