Congratulations Debt Slaves!
Today’s G19 Fed report on Consumer Credit shows that you owe the banks and other creditors yet another record high amount of money.
Consumer Credit
- Total: $4.1 Trillion
- Revolving: $1.1 Trillion
- Non-Revolving: $3.0 Trillion
Well Done.
Mike “Mish” Shedlock
Anyone not paying off credit card bills every month has issues.
In 2018, Americans paid a collective $113 billion in credit card interest, according to MagnifyMoney – a 49% jump from five years ago. Millions of U.S. households also face mortgage, auto and student loans debt. Total U.S. household debt rose to $13.67 trillion in the first quarter of 2019, according to the Fed.
“It’s pretty clear that there are a lot of people that are living close to the edge and if that’s happening in good times, it is worrisome if the good times don’t last,” Rossman says. “So that would be the advice all the more, is pay [your credit card debt] down now, get the side hustle, cut your expenses.”
It can go up pretty fast, my gfriend just bought a million dollar condo, mostly financed. Everyone I know moving right now typically sells about 200-300, then buys in the 300-800 range, always upgrading, always spending. I got lucky, and bought cheap, even the realtors lost interest in trying to get me to sell & trade up, although now over the course of 5 years, I wish I would have.
The problem with NOT being a debt slave, in my experience, is that the government in printing and giving freebees to so many for so much, means you still can’t buy the necessities of life; and the rental companies (which may well be run by debt slaves/debt corps) jack up their prices to fund their debt …
… so, whaddya know, even if you AREN’T a debt slave, you’re still a debt slave.
Luckily I have zero debt…sorry to all who are in hock to the blood-suckers.
My grandfather, a small farmer, who farmed with his brothers, refused to take on debt for a new better farm in the 1930s. The brothers were good farmers and they had the cash flow to pay the debt on the new farm. No, my grandfather and his brothers, kept farming the same poor farmland till they retired just as poor as when they started. Told to me by my aunt, who did not follow their example, and is well off. I know this article is about consumer debt which I agree should not be overused, but debt is essential to improve your circumstances in life.
Well, maybe they lived happily without the continuous stress of having to pay back all that debt, I am sure the word ‘burnout’ didn t exist during those debt ‘poor’ times….
No. They would have been twice as productive with the same amount of work. At times, not taking a risk, stunts your prospects in life and that of your descendants.
Lower interest rates coming to a bank near you in < 6 months.
Default central is coming up. This time around the government should bail NOBODY out.
Won’t happen!
They ‘own’ the Govt! Tax payers, get ready to bend over just like ’09!
This isn’t news. A newsworthy event would be if debt didn’t go up YOY.
Commenter ‘Sechel’ has it right. In my era, you didn’t touch a house unless you had 20% down; no exceptions unless you had a VA loan. Cars would be typically paid off in eighteen months to two years. Second had appliances were common.
Ah yes, a bygone era of responsibility and common sense.
Then again, we didn’t send jobs out of the country. We didn’t export manufacturing, we didn’t import foreign nurses, engineers, etc to drive down labor and wages. No bank would lend out mortgage money with a three percent down payment. Remember the concept of skin in the game?
Maybe we should start exporting bankers, hedge fund managers, entire stock exchanges, etc. Oh wait; I forgot, I live in eastern Massachusetts surrounded by The Coastal Elites who never gave a dam about others and would willingly sell out anyone or any function to have “cheap stuff” and a nice lifestyle.
We need an adiabatic economy. True, it is a very old fashion idea, but it is something to re-evaluate.
GDP 1971 = $1.1T, GDP 2018 $20.5T. Ratios of 12% versus 20%. Keep in mind also that GDP is inflation adjusted, unclear whether or not these debt figures are.
Never mind the increase in population . . . if we have 3 times more people even if everybody carries the same debt load, in toto that’s 3 times the amount.
Has anyone else noticed just how many self storage units are being built? They’re popping up everywhere around me. Has to be a sign of a consumer bubble…
Or an ever expanding bubble in bans on building adequate sized houses, so that people could keep their stuff at home…
But storage is awesome. We have to much stuff, they created a self storage association.
Warren and all the democrats want to forgive all student debt…
Why not credit card debt?
Why not auto loan debt?
Why not mortgage debt?
How do you think this will end…?
Because Warren’s core supporters are more immediately burdened by student loan debt than the others. Some as former “students.” But most because they are dependent on the sustenance and continued growth of the “education” rackets.
Politics in totalitarian societies never rises above crass theft, after all.
The alternative argument is that education is a social good while the others are not. Society needs a certain number (and the argument is the more the better) of educated people to function. However, at least in theory, it can function perfectly well – and has done so in the past – without people using credit for consumption (credit cards), cars and private ownership of housing.
The major change over time is how revolving credit went from 5.6% to 26.8% of the total consumer credit. This is bad for the economy since it has the highest interest rate, which means more of a household’s budget will go toward interest repayment and less toward purchases.
The major change over time…
Is how many fools embrace debt today as compared to their grandparents.
If you are foolish enough to borrow money at 26.8% to get granite counter tops, stainless steel appliances, a new German sports car, trips to Europe, a boob job for the wife, a week with Mickey, tattoos, an Idiot phone, etc.
You deserve everything that comes with it.
I have a neighbor who’s buried in credit card debt. What does he do? He gets a new phone every other year. He thinks the cell phone companies give him a new state of the art phone for free when he agrees to a new contract. I explained to him that they take the price of the phone and divide it by 24 and charge him that every month. I showed him on the web that the monthly cost varied depending on which phone you selected. He told me I didn’t get it.
Financial ‘illiteracy’ more prevalent than assumed!
Best economy ever! You know, if I were allowed to run a country with $1.2T annual deficits and fostered massive credit card debt for individual consumers, I bet I could build a nice looking Potemkin village too.
If the Fed slashes to zero or below in the next few years, we’ll really be off and running!
You are describing the Obama economy perfectly.
Except you forgot to mention health care costs climbing double digits, and ObamaCare premiums soaring 30% yoy
I didn’t want to go red/blue in my post because it applies to America post-TARP, but you’re clearly a red team acolyte. Did my “best economy ever” dig strike a nerve?
You should get out of the partisan game, it makes fools of everyone dumb enough to play. Just admit that massive sovereign and consumer debt loads are ominous no matter which team promotes it at the moment.
But you really did describe the Obama era economy. You may have meant to whine about Trump, but (perhaps inadvertently) you ended up whining about Obama too
Duh, that was the intent. Both parties are rotten, which should be abundantly clear to even the most passive observer by now.
The FED will never slash rates to 0 or negative.
On what basis?
Look at Eu and Japan!
you wrote: ” Look at Eu and Japan!”
You should have written “Look at Germany and Japan!” since the rest of the EU can’t finance the EU.
And as of Sunday night, you should have written “Look at Deutche Bank and Japan!” because DB is (was?) the finance vehicle of the EU paymaster.
I am sure Germany will find a way to protect DB, because they have no choice. But there will be a price, and the most obvious decision for Germans (outside of Merkel) is to stop propping up the tyrannical Brussels
And to your point about Japan? Yes, look at what 30 years of inept monetary policy gets you.
Inflation/shrinkflation hittin hard,prices are rising………..ALMOST DAILY!Govt is constantly (almost daily)tryin to nickel amd dime you with fee increases,toll increases,sneaky tax increases as prices /costs soar,ffood,insurance,cable omg!!!
A billion here and a billion there and pretty soon we’re talking about real money! (How I miss Senator Dirksen.)
Just got my property tax bill. About 10% higher than last year. It wasn’t because my property became more valuable over the last year. It was because I added a room addition 5 years ago. I guess there was a lag.
I suspect owning property may become a bad thing once the SHTF. It’s a tax target that impossible to avoid.
cue the fireworks
The biggest debt slaves of all are govts.