You could read almost all of the voluminous coverage of the present crisis in the financial markets in the legacy media without ever encountering the essential term which describes what’s going on at the “big picture” level, understanding the underlying cause for the events in the news, or comprehending the magnitude of the problem and how protracted may be its consequences. The following chart encapsulates everything you need to know about the present situation. This is not a “mortgage crisis”, “derivatives crisis”, “credit crisis”, or any of the other terms bandied about describing aspects of the larger situation—it is a debt crisis and it always has been. The United States have experienced a multi-decade bubble market, rolling over from equities and real estate in the 1980s, to technology stocks in the 1990s, and back to residential real estate in the aughties, all driven by an unprecedented explosion of debt, as illustrated below.

“bailouts” as presently proposed and implemented make no difference whatsoever in this chart. They’re just a transfer of debt from the private account to the public account.

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