The Definition of Private Debt and How the Level of Private Debt Predicts Economic Declines

Executive Summary

• Private debt is differentiated from public debt.

Introduction

Debt is the accumulated level of credit. Private debt is the combination of business plus household debt. Mainstream economists, as directed by private banking interests, do not spend much time discussing private debt levels. This is repeatedly observed by Richard Vague and Steve Keen.

According to both Richard Vague and Steve Keen, economic declines are predicted by a combination of a high PRIVATE debt level (often considered around 150% of GDP) and a five-year growth in debt which averages over 18%. This is the indicator of a speculative bubble.