we have entered the Age of Deleveraging and the debt has to be written off for the global economy to move forward.
Perhaps this is one of the central subjective questions, but....How much debt has to be written off?
I looked around a little for current estimates of M2, M3, derivatives, etc, but didn't really find what I was looking for. Anyone have a good source?
Cypherdoc, do you have any theories or data about how much debt has to be defaulted on before a sustainable level is reached? What is a sustainable level, and is there long-term data to support that number (ie, can we simply look at leverage levels before the debt/securitization explosion of the 90s and 2000s as the "norm" that we will/should return to, and calculate the necessary debt-money supply deflation on that?).
i think we would have to get down to about the fractional reserve norm of 10:1 as the banks used to be. with all the deregs like sweep accts that occurred since 2000 the primary dealers had gotten to 40:1 and i think FNM/FRE got up to 120:1. effectively they had NO reserve ratios which is how things got so out of hand. home buyers would need to put down the old usual 20% and the debt to income ratios would need to be restored to 1:3.