[quote=dumbrenter]
So from above, the deleveraging process actually evens out the wealth field rather than concentrating it.

Maybe unless the rich get the government to buy the devalued asset and make them whole and stick the difference to the tax payers who are mostly poor. But that would never happen in a democracy, right? :-)[/quote]

Exactly. The reality is we’re aren’t actually deleveraging. If you look at the fed Z1 for total debt you see it slightly increasing with the government deficits replacing any deleveraging in the financial sector. Any deleveraging in the consumer space (i.e. mortgages and car loans) is being replaced by student loan debt. In the great depression we actually deleveraged the debt to a manageable level. In Japan they haven’t deleveraged from 1990. So while it might be possible to carry on like Japan for the next 20 years and avoid the deleveraging process, we aren’t going to see any significant asset price increases assuming nobody does anything stupid to cause hyper inflation.