Curing Debt with Debt – Bad Things Will Happen

The main problem is that the country is excessively indebted. We have got too much debt – public and private – relative to GDP, and an increasing portion of this debt is unproductive or even counterproductive, which means that we are not going to be able to generate income in the future to service the debt.

…Charles Kindleberger, in his great book Manias, Panics, and Crashes, called it "overtrading." In other words, people do things beyond their fundamentals, and for a time it is very enjoyable. Incomes are rising, prices are rising, people are being employed, but the process can go too far; and then Kindleberger said that you eventually move into what is called "discredit." Discredit is when a certain discerning minority starts pulling their money out. And then discredit leads to revulsion, when the general population realizes that there are a lot of core problems and they try to pull out, and then you have your crash.
                                                   .................... Lacy Hunt