Podcast
Questions and Answers
What do we call it when people borrow more money and appear more creditworthy?
What do we call it when people borrow more money and appear more creditworthy?
- Income rise
- Debt cycle
- Bubble (correct)
- Debt burden
What happens when debt repayments start growing faster than incomes?
What happens when debt repayments start growing faster than incomes?
- Forced to cut back on spending (correct)
- People borrow more money
- People feel wealthy
- Asset values increase
How do rising incomes and asset values impact borrowers' creditworthiness?
How do rising incomes and asset values impact borrowers' creditworthiness?
- Decrease creditworthiness
- No effect on creditworthiness
- Cause bankruptcy
- Improve creditworthiness (correct)
What is the outcome when debt burdens slowly increase over decades?
What is the outcome when debt burdens slowly increase over decades?
Why do lenders extend credit more freely despite people becoming more indebted?
Why do lenders extend credit more freely despite people becoming more indebted?
What effect does borrowing huge amounts to buy assets as investments have on asset prices?
What effect does borrowing huge amounts to buy assets as investments have on asset prices?
Why does borrowing decrease during a deleveraging period?
Why does borrowing decrease during a deleveraging period?
What happens to asset prices during a deleveraging?
What happens to asset prices during a deleveraging?
Why is lowering interest rates ineffective during a deleveraging compared to a recession?
Why is lowering interest rates ineffective during a deleveraging compared to a recession?
What is the primary reason for the difference between a recession and a deleveraging?
What is the primary reason for the difference between a recession and a deleveraging?
What contributes to the vicious cycle during a deleveraging period?
What contributes to the vicious cycle during a deleveraging period?
How do borrowers react when they feel crippled by debt during a deleveraging?
How do borrowers react when they feel crippled by debt during a deleveraging?
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