The Great Divergence

[Jester]

I found an article on how in the US, households and corporations are attempting to de-leverage, while the Feds undo it all by spending borrowed money adding to our deficit and national debt.

I hate to flog a dead horse, but... you do understand that this is precisely the point? That if "households and corporations" (that is, the entire private sector) all "de-leverage" simultaneously, that causes a massive general glut in the market for everything except safe assets (gold and US bonds), causing deflation and a collapse in production? That the government is the only remaining actor with the ability to help undo this damage?

TL,DR: Government spends because nobody else will, and someone has to.

-Jester