4 ms·
this is a timebomb most people wish to forget out of existence. personal debt levels almost nearing 1 to 1 with GDP. a gvt can print money, household's can't.
by dzonga 4y ago
this is a timebomb most people wish to forget out of existence.
personal debt levels almost nearing 1 to 1 with GDP. a gvt can print money, household's can't.
something gotta give. and most americans have been living under the illusion that
using a credit card is normal whereas most european countries well up until the recent cost of living crisis - most people can get by with normal salary without borrowing except for a mortgage.
personally, I wonder what the effects will be like when everyone defaults.
maybe we need to bring back a debt forgiveness holiday
- newaccount2021 4y ago
- floxy 4y agoThe Fed report is a lot more interesting: https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2022Q2 https://www.newyorkfed.org/medialibrary/interactives/househo... ...looks like credit card debt is pretty stable since 2003 at just under $1 trillion (page 10).
- rightbyte 4y agoEDIT: My head hurts 10e12/320e6 = 31250 USD/person That is quite a lot at credit card interest.
- floxy 4y ago$1 trillion = 10^12 = 1e12. 1e12/320e6 = $3125 per person for just the credit card debt portion.
- rightbyte 4y agoOh ... I might need to do a high school math refresher soon. The number sounded a bit silly.
- imtringued 4y ago$300 interest (the cards I have access to charge 10%) per person is still ridiculous. Credit cards aren't meant to have a balance for long unless it is some odd 0% financing scheme.
- aaaaaaaaata 4y ago> Credit cards aren't meant to But...they can. So they will.
- positr0n 4y agoWe put everything but our mortgage on credit cards and always pay them off. But still the statement each month is always at least $3000. Does that show up in this statistic? Or does it only count as debt if you haven't paid it all the first billing cycle?
- throwaway5959 4y agoOr just let interest rates rise and let the problem solve itself.
- Ekaros 4y agoIsn't that free money too. Higher interest rates means more money for lenders. Thus higher profits.
- throwaway5959 4y agoI’m talking about a higher Fed Funds rate, which does push up other rates but will ultimately end up with the money at the Fed.
- imtringued 4y agoHow does more expensive debt solve the problem? If you are $3000 in debt on your credit card with $300 interest and you repay $80 per month that is roughly $1000 repaid per year so four years to repay this debt. At double the interest it will take five years to pay it off. If your income doesn't rise with the higher interest rate it gets harder to pay off your debt. If you wanted people to pay off their debts it would be better to have lower interest rates with higher minimum monthly payments but more stringent limits (e.g. higher capital requirements) on lending and requirements for borrowing. Make it easier to pay off debt than to get new debt. Your strategy merely boils down to liquidationism, if borrowers default there will be less debt, the consequences don't matter to you.
- throwaway5959 4y agoWould you prefer almost everyone being poorer due to inflation? If you take out debt there’s a presumption that you’ll pay it back. At least there used to be. No one gets a credit card and thinks “oh gee this card’s 29% interest rate is so affordable compared to a 31% interest rate”.
- naveen99 4y agoThat’s only about 10% household wealth for the usa. GDP is almost double that.