Monday, March 19, 2007
Debt and wealth
Posted by David Smith at 09:00 AM
Category: Thoughts and responses

A paper in the Bank of England's quarterly bulletin, available here, points out that consumption in Britain in recent years has not been funded by a 'tidal wave of debt' but also brings out big differences in the distribution of debt, with older age groups - 35-plus - benefiting from a big increase in net wealth, in contrast to those 34 or under. That is not unusual, but the scale of it in recent years is.


There's nothing quite like a healthy dose of rational analysis to remind us to wince when we read the newspapers articles of the debt mountain doom-mongers. Charts 1 and 2 are particularly insightful, capturing the essence of the whole article.

We don't have the granular statistics to prove it, but this paper further lends weight to the statistically supported notion (in the US) that the debt mountain is of less concern because most of the debt resides with the wealthier segment of the population. Thus, looking at the average debt levels is a gross misrepresentation.

Posted by: Caravaggio at March 19, 2007 01:41 PM