Debt balances for U.S. households now greater than just before the 2008 financial collapse
Despite Americans going through millions of foreclosures, bankruptcies, and loss of jobs just nine years ago, few lessons were learned as a combination of declining incomes and the mantra of ‘it will be different this time’ have led households in the United States to not just accumulate large debt balances, but as of June even surpass the totals held just prior to the financial collapse of 2008.
According to a new statistic on household debt in the United States, Americans now have a greater accumulation of debt here in 2017 than they did back in 2008.
American consumers have accumulated $1.02 trillion of debt on their credit cards as of June, according to the US Federal Reserve. This is more than the record set just before the 2008 financial crisis.
US household debt balances were $12.73 trillion in March 2017, compared to the 2008 peak of $12.68 trillion.
This happens as banks continue to invite clients to sign up for cards in the era of low-interest rates.
In the first quarter of the year, more than 171 million consumers had access to credit cards backed by major banks. Credit cards in the US have never been so easy to obtain.
‚ÄúThis record should serve as a wake-up call to Americans to focus on their credit card debt,‚ÄĚ¬†said Matt Schulz, a senior industry analyst at CreditCards.com, an industry website. –¬†Russia Today
With consumer and government spending encompassing over 90% of the entire U.S. economy, near zero interest rates and programs like ‘cash for clunkers’ have helped fuel the country to a whopping $41 trillion of debt when you count both government and household obligations. ¬†And with 95% of all jobs created since the financial crisis being low wage ones, and consumer price inflation really running at between 8 and 10%, it is no wonder that many Americans have had to charge most of their purchases on the credit card not just to accumulate material goods, but also just to survive.
America’s, as well as most of the world’s use of debt based currency means that each financial system requires the continuous growth of debt and borrowing just to sustain or rollover debts that very likely will never be paid off. ¬†And with U.S. debt at 2.25 times its annual GDP, and global debt levels at 325% of the world’s total yearly production, how much more debt can individuals and governments accumulate before a loss of confidence in the world’s currencies brings the system once again crashing down.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.