No-Limit Poker Economy?

[Zeno]

Bill Gross Article about dept and elsewhere Whoa Nelly (http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_02_04.htm)

I think I get the gist. Anyone worried? Or is the sky always falling?

-Zeno

[adios]

I actually scanned this article from PIMCO yesterday before seeing your post as I read it more thoroughly today. One think that jumps out at me is that as the disinflation, decining interest rate trend that started around 1980 has progressed total credit market debt as a percentage of GDP has also increased. Seems almost like rational behavior to me. Interest rates lower, inflation under control, credit is more available. Gross's message seems to be that the economy is over leveraged for lack of a better term. The leverage factor has doubled since 1980. Is this too much? I don't know and I don't think Gross knows. Obviously Gross believes interest rates are too low but I'd counter that looking at the long end of the yield curve where inflation risks are most acute is rather flat. This tells me that inflation expectations are low. The tradional factors that drive higher inflation risks just don't seem to exist at least now.