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> If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due
by danans 1y ago
> If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Probably, but for sobering reasons, maybe less so than in the past, because because 50% of US consumer spending is by the top 10%, and the top 10% is far less dependent on credit for their spending.
A society where there is a more balanced distribution of spending power would be more affected by a consumer credit collapse, but the treasuries of such a society might be more desirable anyways.
- BoredPositron 1y agoThe top 10% don't hold their money in liquid assets. Most of the time they get loans and use their non-liquid assets as collateral. They just don't have money laying around.
- danans 1y agoSource? The top decile of the US income distribution starts at $170000/yr. The top decile of the wealth distribution is around $1M net worth. The people doing the borrow-for-spending-against-non-housing-assets-as-collateral are beyond the top .01%. While they are also spending whales, they are able to negotiate far more favorable rates than the rest of the top 10%, whose spending is mostly income-driven.