Numerous people sent me a link to a preposterous statement by fund manager Ken Fisher regarding debt. Please consider Too Much Debt? Please. We Need MORE Debt, Says Ken Fisher.



The conventional wisdom is that Americans are struggling to crawl out from under a mountain of debt that will restrain growth and weigh down the economy for decades.



As [the following] chart shows, the US debt-to-GDP ratio recently soared to an all time high of 370%, meaning that for every $1 of output we produce, we have borrowed $3.70. This compares to a long-term debt-to-GDP average of about 150%.







click on chart for sharper image



Last time we went on a massive debt binge, in the 1920s, our debt-to-GDP ratio hit a relatively mild 250%, and we spent the better part of two decades (and the Great Depression) working it off. Many economists think the same thing will happen this time around.



But they're wrong, says Ken Fisher, CEO of Fisher Investments ($35 billion under management), in a wildly contrarian view.



The U.S. has too little debt, not too much, Fisher says. The U.S.'s return on assets is high and interest rates are low, so our borrowing capacity is much higher than our current debt levels.



Also, Fisher says, you have to look at the U.S. in the context of the world, because the U.S. is only 25% of world GDP. The world is way under-leveraged, so one country's particular debt-to-GDP ratio doesn't matter.

We had Ken Fisher on TechTicker yesterday. Ken has managed money for nearly 40 years, and now has $35 billion of assets under management.



You make the big money on Wall Street when you hold a view that is so contrarian that most people think you are nuts. So Ken's argument certainly merits consideration. But I have to admit that, right now, I think he's nuts.

Contrarian or Nuts?

Can Fisher Ever Say Sell?