Nature is healing

We're burning through cash and that's a good thing, plus other signs that we may have suffered enough

Consumers must suffer so that investment can live. Random Walk didn’t make the rules, but those are apparently the rules. The good(?) news is that we seem to be winning, and our undoing can’t come soon enough.

Things we think

Credit > Cash

Credit card balances to the moon!

Consumer credit card debt is a natural place to look if one was looking for signs of stress. The reasoning is pretty straightforward: if people are putting a lot of stuff on their credit cards, then consumers are “stretching” (because otherwise they’d be using cash or at the very least saving more). So, if credit card debt goes up and the savings rate goes down, then consumers are in trouble.

Lo and behold, that’s exactly what’s happening:¹ the blue line (credit card debt) is going up quickly, while the red line (savings rate) is going down basically just as quickly:

Oh no. Here comes another doomcast from Random Walk. The end is nigh! Save the women and children! Blah blah.

Nature is healing

Or is it? This time I’m actua…