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Credit card debt probably isn't the "earliest" signal of that. We've been running pretty solid federal deficits for going on 40 years now -- that's probably a

Credit card debt probably isn't the "earliest" signal of that. We've been running pretty solid federal deficits for going on 40 years now -- that's probably a good indication that people feel that they deserve more than they pay for.

damptowel 10y ago
Governments have been running deficits for 5000 years, it's how currency is established.
- toomuchtodo 10y ago
  US citizens are binging on credit to make up for stagnant wages. That's not a theory, that's a fact. First it was housing, now its credit card and auto loan debt. Fun fact: Subprime auto loan bonds are in a slow motion trainwreck: http://money.cnn.com/2016/03/15/investing/subprime-unpaid-auto-loans-oil-crash/ http://money.cnn.com/2016/03/15/investing/subprime-unpaid-au... http://www.bloomberg.com/news/articles/2016-03-21/this-is-what-s-going-on-beneath-the-subprime-auto-loan-turmoil http://www.bloomberg.com/news/articles/2016-03-21/this-is-wh...
  - mac01021 10y ago
    You're asserting that, if wages were not stagnant, people would not binge on credit? Maybe that's true, but I doubt it's noncontroversial enough to be declared "fact rather than theory".
deleted 10y ago
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dionidium 10y ago
Analogies from federal budgets to household ones are specious at best
- mac01021 10y ago
  Why? In both cases a deficit imposes a burden on our future selves or our descendants.
  - ArkyBeagle 10y ago
    Because presumed GDP growth eclipses the debt over time. They ran cool BILLIONS in terrifying debt in the US in WWII. Now? A billion is what a mid sized company costs. And if you don't run any debt, it's like having zero body fat in cold climates. No insulation, and any caloric deficit causes much more severe problems. Nobody said it had to be simple.
    - mac01021 10y ago
      But why does that make analogies to household finance invalid? It may also make sense for a household to take on debt if there is projected income growth. Also, isn't the accumulation of body fat the definition of a surplus, rather than a deficit? In both cases, having run a surplus in the past provides protection for when you must run a deficit in the future. Furthermore, are you suggesting that, a metabolic analogy is more correct than a household-finance analogy?
      - ArkyBeagle 10y ago
        The Household Debt Fallacy is a specialization of the Fallacy of Composition. 1) The debt is eclipsed by GDP rise over time. 2) A government ( at least used to ) be able to very slightly weaken its currency to equalize for GDP and population growth. 3) Mild inflation acts to equalize the effects of private debt as well. I use the metabolic analogy because the risks of no body fat and low body fat are quite different, much as the risks of mild inflation and no inflation - or more accurately, deflation - are quite different.

damptowel 10y ago

Governments have been running deficits for 5000 years, it's how currency is established.

toomuchtodo 10y ago
US citizens are binging on credit to make up for stagnant wages. That's not a theory, that's a fact. First it was housing, now its credit card and auto loan debt. Fun fact: Subprime auto loan bonds are in a slow motion trainwreck: http://money.cnn.com/2016/03/15/investing/subprime-unpaid-auto-loans-oil-crash/ http://money.cnn.com/2016/03/15/investing/subprime-unpaid-au... http://www.bloomberg.com/news/articles/2016-03-21/this-is-what-s-going-on-beneath-the-subprime-auto-loan-turmoil http://www.bloomberg.com/news/articles/2016-03-21/this-is-wh...
- mac01021 10y ago
  You're asserting that, if wages were not stagnant, people would not binge on credit? Maybe that's true, but I doubt it's noncontroversial enough to be declared "fact rather than theory".

deleted 10y ago

[deleted]

dionidium 10y ago

Analogies from federal budgets to household ones are specious at best

mac01021 10y ago
Why? In both cases a deficit imposes a burden on our future selves or our descendants.
- ArkyBeagle 10y ago
  Because presumed GDP growth eclipses the debt over time. They ran cool BILLIONS in terrifying debt in the US in WWII. Now? A billion is what a mid sized company costs. And if you don't run any debt, it's like having zero body fat in cold climates. No insulation, and any caloric deficit causes much more severe problems. Nobody said it had to be simple.
  - mac01021 10y ago
    But why does that make analogies to household finance invalid? It may also make sense for a household to take on debt if there is projected income growth. Also, isn't the accumulation of body fat the definition of a surplus, rather than a deficit? In both cases, having run a surplus in the past provides protection for when you must run a deficit in the future. Furthermore, are you suggesting that, a metabolic analogy is more correct than a household-finance analogy?
    - ArkyBeagle 10y ago
      The Household Debt Fallacy is a specialization of the Fallacy of Composition. 1) The debt is eclipsed by GDP rise over time. 2) A government ( at least used to ) be able to very slightly weaken its currency to equalize for GDP and population growth. 3) Mild inflation acts to equalize the effects of private debt as well. I use the metabolic analogy because the risks of no body fat and low body fat are quite different, much as the risks of mild inflation and no inflation - or more accurately, deflation - are quite different.