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What is Beautiful Deleveraging?


less than 1m read
·Nov 8, 2024

A number of people asked me, "What is a beautiful deleveraging?" Well, first let me start with what is the deleveraging. Sometimes there's too much debt burden, which also means that somebody's holding too many debt assets and they're not going to get paid.

So, what is necessary is to bring those things down in relation to incomes, and so that's a deleveraging. What is a beautifully leveraging? A beautiful deleveraging is when that happens in a spread-out way over a period of time and in a balanced way.

Now, spread out, let me give you an example. If you can't pay all your debts, maybe you can pay 70 or 80 percent of those debts, and you spread that over a period of time. For those who are not getting those debt payments, then that shifts their burden over a period of time.

There are two ways of bringing down those debts: paying less or having the Central Bank print money, which produces some inflation pressures. When they do that, if they print a little bit of money and then you have the restructuring, they can balance each other and make it a smoother and less disruptive. That is a beautiful deleveraging.

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