Why Debt and Debt Deflation Matters in One Para

If you are a firm and demand falls you can cut back, perhaps sell some assets and stay in the black.  But if you owe debt or have high fixed operating costs you can be driven into the red, perhaps having to sell all assets and with the risk operations and employment ceasing – knocking on to the rest of the economy.  But economists say credit = debt so it all evens out?  Not if you are bankrupt it doesn’t, then the creditor no longer has an asset they thought they had.

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