H. Hunt Households Quotations

The country is entering a period of debt deflation, where households and businesses are forced to move funds from spending to debt repayment. This forces down economic growth and reduces inflationary pressures and long-term interest rates.

To have an effective monetary policy, you have to have a robust borrowing and lending cycle. The problem is that households and businesses are both overextended, while banks have problems with their current loan base. So we don't have a viable borrowing and lending cycle, which means that monetary policy is not working effectively.