Is Our Debt Causing More Wealth Inequality?

One of the wisest bond investors in the world for the last 40 years is Dr. Lacy Hunt, Executive Vice President, Hoisington Investment Management. He believes that interest rates will continue to drop as our country takes on more and more debt as this is what has happened in Japan and much of Europe.

Here is what he wrote 2 weeks ago—

“Excessive indebtedness acts as a tax on future growth and it is also consistent with Hyman Minsky’s concept of ‘Ponzi finance,’ which is that the size and type of debt being added cannot generate a cash flow to repay principal and interest.

While the debt has not resulted in the sustained instability in financial markets envisioned by Minsky, the slow reduction in economic growth and the standard of living is more insidious.

While the debt was taken on with presumably good intentions, the result has been an increased wealth and income divide.” WOW!!!