Guest post by Azizonomics.
Hayekians and Minskians agree on one key thing: an increase in debt beyond the underlying productive economy is unsustainable.
In my view, the key figures in defining this are total debt as a percentage of GDP, and its relationship with industrial production. Debt as a percentage of GDP tracks how much debt there is relative to one measure of economic activity, GDP. Yet GDP is a very limited tool of measurement; all GDP really tracks is the circulation of money. To get a clearer sense of the true relationship with underlying productivity, it is useful to compare the ratio of debt-to-GDP with the level of industrial production.
Meanwhile in Madrid things are heating up. From El Pais.
Two days after the central government delegate in Madrid, Cristina Cifuentes, noted that the “black march” organized by protesting miners had been entirely without incident, the denouement of the 430-kilometer journey descended into violence in the center of the capital.
The 200 marchers were joined by thousands of sympathizers and members of the labor unions as they marched from Colón square to the doors of the Industry Ministry along nearby Paseo de la Castellana on Wednesday. Among the newcomers were members of the 15-M protest movement, teachers protesting cuts in education, families and politicians. Also among the throng — which the CCOO and UGT labor union expected to be 25,000 strong, although no official figures were available — were what an Interior Ministry spokesman described as “anti-system groups, armed with bottle rockets and bricks.”