The ACID Capitalist Podcast What If Government Debt Isn’t Debt at All?
Nov 1, 2025
Dive into the intriguing world of Ricardian equivalence, where government deficits could paradoxically enrich private wealth. Explore how market trends and the Fed's actions shape economic realities, alongside the troubles facing the paper industry since the pandemic. Discover the nuances of private sector debt, its historical context, and implications for financial stability. Finally, analyze Estee Lauder's potential recovery and innovative options strategies to capitalize on its valuation collapse. It's a fascinating mix of economics, finance, and investment insights!
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University Accounting Research Memory
- Hendry recalls studying market-based accounting research at university with green-screen computers.
- He used event studies to test whether markets correctly price accounting changes versus real cash-flow shocks.
Private Debt Ratios And Systemic Risk
- US private-sector debt-to-GDP averaged ~132% (1995–2024) and peaked at 172% in 2008.
- Deleveraging since the pandemic lowered ratios, but private debt remains a key systemic risk driver.
How Deficits Create Private Assets
- Government deficits create private-sector bank deposits and central-bank reserves when spending exceeds tax receipts.
- That initial deposit rise is later replaced by Treasury bonds, so deficits create private assets but not automatic inflation.
