The fears of recession in the aftermath of Black Monday have turned to fears of the economy racing ahead too fast, with inflation edging up and a substantial current account deficit...people understandably feel more confident about their future than they've done for decades, but as a result they have been borrowing more and saving less...coming on top of a massive income investment boom, it's all been just a bit too much of a good thing.
About this quote
- What does it mean?
- Economic overheating from excessive borrowing and spending can lead to inflation and deficits.
- In plain terms
- Too much borrowing and spending risks economic imbalance.
- What can you take from it?
- Avoid excess borrowing even when the economy looks strong.
Where it applies
Putting it to work
Questions to consider
- When does confidence become overconfidence?
- How much debt is too much for an economy?
Another view
Growth might be slowed if spending is curbed too aggressively.
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