Wednesday, July 20, 2011

The credit card effect

The credit card effect (as opposed to 'the butterfly effect') - one persons (credit card) debt could bankrupt a country - or even the world's economy.

This is the perfect economic fractal example where dangerous massive debt burdens have migrated from the small scale (individual) to the large scale (country);  the principle or idea (of debt) is the same, the scale is irrelevant.
I explained the world's economic problems to my 10 year old daughter by reducing the problem to her scale - it was very easy.

Today - through the mechanism of (moral hazard) bank bail-outs - it is countries that are getting burdened.

Where to next?

This is the perfect storm.'

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