From the dawn of history, elites have always attempted to enslave humanity. Yes, there have certainly been times when those in power have slaughtered vast numbers of people, but normally those in power find it much more beneficial to profit from the labor of those that they are able to subjugate. If you are forced to build a pyramid, or pay a third of your crops in tribute, or hand over nearly half of your paycheck in taxes, that enriches those in power at your expense. You become a “human resource” that is being exploited to serve the interests of others. Today, some forms of slavery have been outlawed, but one of the most insidious forms is more pervasive than ever. It is called debt, and virtually every major decision of our lives involves more of it. For example, at the very beginning of our adult lives we are pushed to go to college, and Americans have piled up more than 1.2 trillion dollars of student loan debt at this point. When we buy homes, most Americans get mortgages that they can barely afford, and when we buy vehicles most Americans now stretch their loans out over five or six years. When we get married, that often means even more debt. And of course no society on Earth has ever piled up more credit card debt than we have. Almost all of us are in bondage to debt at this point, and as we slowly pay off that debt over the years we will greatly enrich the elitists that tricked us into going into so much debt in the first place. At the apex of this debt enslavement system is the Federal Reserve. As you will see below, it is an institution that is designed to produce as much debt as possible.
There are many people out there that believe that the Federal Reserve is an “agency” of the federal government. But that is not true at all. The Federal Reserve is an unelected, unaccountable central banking cartel, and it has argued in federal court that it is “not an agency” of the federal government and therefore not subject to the Freedom of Information Act. The 12 regional Federal Reserve banks are organized “much like private corporations“, and they actually issue shares of stock to the “member banks” that own them. 100 percent of the shareholders of the Federal Reserve are private banks. The U.S. government owns zero shares.
Many people also assume that the federal government “issues money”, but that is not true at all either. Under our current system, what the federal government actually does is borrow money that the Federal Reserve creates out of thin air. The big banks, the ultra-wealthy and other countries purchase the debt that is created, and we end up as debt servants to them. For a detailed explanation of how this works, please see my previous article entitled “Where Does Money Come From? The Giant Federal Reserve Scam That Most Americans Do Not Understand“. When it is all said and done, the elite end up holding the debt instruments and we end up being collectively responsible for the endlessly growing mountain of debt. Our politicians always promise to get the debt under control, but there is never enough money to both fund the government and pay the interest on the constantly expanding debt. So it always becomes necessary to borrow even more money. When it was created back in 1913, the Federal Reserve system was designed to create a perpetual government debt spiral from which it would never be possible to escape, and that is precisely what has happened.
Just look at the chart that I have posted below. Forty years ago, the U.S. national debt was less than half a trillion dollars. Today, it has exploded up to nearly 18 trillion dollars…
But the national debt is only part of the story. The big banks which control the Federal Reserve also seek to individually dominate our lives with debt. We have become a “buy now, pay later” society and the results have been absolutely catastrophic. 40 years ago, the total amount of debt in our system was just a shade over 2 trillion dollars. Today it is over 57 trillion dollars…
The big banks do not loan you money because they want to help you achieve “the American Dream”. The elitists loan you money because it will make them wealthier. For example, if you only make the minimum payment on a credit card each month, you will end up paying back several times as much money as you originally borrowed. It is a very insidious form of debt enslavement that most Americans simply do not understand.
Meanwhile, the Federal Reserve is also systematically destroying the wealth that you already have. If you try to buck the system and actually save money, the purchasing power of that money is continually being eroded by the Federal Reserve’s inflationary policies. The following chart comes directly from the Federal Reserve and it shows how the value of the U.S. dollar has plummeted over the past 40 years…
Overall, the U.S. dollar has lost approximately 98 percent of its value since the Fed was first established in 1913.
Most people seem to assume that if we could just send the “right politicians” to Washington D.C. that we could get our economy back on the right track.
What those people do not understand is that our system is fundamentally broken. We are trapped in a perpetual debt spiral that is destined to end in a horrifying collapse. Just “tweaking” a few things here or there and adjusting tax rates a bit is not going to fix anything. The vast majority of the “economic solutions” that our politicians talk about are basically equivalent to rearranging the deck chairs on the Titanic.
And of course the elite don’t want the rest of us to truly understand what is going on. Just think about it. Even though the Federal Reserve is one of the most important institutions in our society, and even though it is at the very heart of our economic system, our kids are taught next to nothing about the Fed in school. The vast majority of them have absolutely no idea where money comes from.
Isn’t that pathetic?
But the elite know that if we did understand what they were doing to us that most of us would start to get very upset. Henry Ford, the founder of Ford Motor Company, once said the following…
“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.”
Please share this article with as many people as you can. The truth sets people free, so let us do what we can to wake our fellow Americans up to this insidious debt enslavement system which dominates our society.
How do you fix a superpower with exploding levels of debt, that has a rapidly aging population, that consumes far more wealth than it produces, and that has scores of zombie banks that could collapse at any moment. You might think that I am talking about the United States, but I am actually talking about Europe. You see, the truth is that the European Union has a larger population than the United States does, it has a larger economy than the United States does, and it has a much larger banking system than the United States does. Most of the time I write about the horrible economic problems that the U.S. is facing, but without a doubt economic conditions in Europe are even worse at the moment. In fact, there are many (including the Washington Post) that are calling what is happening in Europe a full-blown “depression”. Sadly, this is probably only just the beginning. In the months to come things in Europe are likely to get much worse.
First of all, let’s take a look at unemployment. If the U.S. was using honest numbers, the official unemployment rate would probably be somewhere close to 10 percent. But in many nations in Europe, the official unemployment rate is already above the ten percent mark…
The official unemployment rate for the eurozone as a whole is currently 11.5 percent. The lack of good jobs is causing the middle class to shrink all over Europe, and more people than ever are becoming dependent on government assistance. European nations are well known for their generous welfare programs, but all of this spending is causing debt to GDP ratios to absolutely explode…
At the same time, the value of the euro has been steadily declining over the last six months. This is significantly reducing the purchasing power that European families have…
Many believe that the euro will ultimately go much lower than this. Nations such as Greece and Spain are already experiencing deflation, and the inflation rates in Germany and France are both currently below one percent. If the European Central Bank starts injecting lots of fresh euros into the system to combat this perceived problem, that will lift the level of inflation but it will also further erode the value of the euro.
In the long run, it would not be a surprise to see the U.S. dollar at parity with the euro.
When it happens, remember where you heard it.
The Europeans are scared to death of a deflationary depression, but that is precisely where the long-term economic trends are taking them right now. The following is from a recent Forbes article…
Market consensus believes that the eurozone is edging toward that moment when the scourge of deflation actually becomes a crippling reality. Eurozone data is constantly reminding investors that the region’s economy is barely limping along, as companies slash selling prices in a vain attempt to improve sales in the face of a weakening economy and evaporating new orders. Corporate deflationary reactions like this only hurt a company’s bottom line by squeezing profit margins even further. The obvious knock-on effect will limit resources for hiring and investing, which in turn only dampens any chances of an economic rebound, again putting the region into a bigger hole.
In a desperate attempt to avoid widespread deflation in Europe, the ECB will inevitably take action at some point.
It may not happen immediately, but when it does it will be yet another salvo in the emerging global currency war.
Speaking of currencies, it is being reported that Russia is actually considering legislation that will ban the circulation of the U.S. dollar in that nation. The following is from an article that was posted on Infowars…
Russia may ban the circulation of the United States dollar.
The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.
If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.
Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.
That is not good news for the U.S. dollar at all.
Expect wild shifts in the foreign exchange markets in the months and years to come. Turbulent times are ahead for the dollar, the euro and the yen.
Getting back to Europe, let us hope that things stabilize over there – at least for a while.
But that might not happen. In fact, things could take a turn for the worse at any moment.
Most people don’t realize this, but European banks are even shakier than U.S. banks, and that is saying a lot.
For example, the largest bank in the strongest economy in Europe is Deutsche Bank. At this point, Deutsche Bank has approximately 75 trillion dollars worth of exposure to derivatives. That amount of money is about 20 times the size of German GDP, and it is more exposure than any U.S. bank has.
And Deutsche Bank is far from alone. All over Europe there are zombie banks that are essentially insolvent. Many of them are being propped up by their governments. Those governments know that if those banks failed that it would make their economic problems even worse.
Just like in the United States, most economic activity in Europe is fueled by debt. So those banks are needed to provide mortgages, loans and credit cards to average citizens and businesses. Unfortunately, bad debt levels and business failures continue to shoot up all over Europe.
The system is breaking down, and nobody is quite sure what is going to happen next.
So keep an eye on Europe. In particular, keep an eye on Italy. I have a feeling that big economic news is about to start coming out of Italy, and it won’t be good.
In 2014, we have been experiencing “the calm before the storm”.
But 2015 is right around the corner, and it promises to be extremely “interesting”.
It is that magical time of the year for retailers. The period between mid-October and late December can often make the difference between success or failure in the retail industry, and this year will be no exception. As you will see below, it is being projected that Americans will spend a massive amount of money this holiday season. In fact, what Americans plan to spend on Christmas this year is greater than the yearly GDP of the entire nation of Sweden. So isn’t this good economic news? Shouldn’t we be happy that Americans are opening up their wallets so eagerly? Well, it depends how you look at it. Even though our spending is increasing, our incomes are not. As I discussed the other day, 50 percent of American workers make less than 28,031 dollars a year and incomes have been stagnant for years. That means that any increases in spending must be funded by more debt, and that is not good news at all.
In 2014, approximately 70 percent of all Americans will participate in Halloween. It seems like with each passing year this dark holiday become even more popular, and before it is all said and done it is being projected that Americans will spend a whopping 7.4 billion dollars this time around…
Kicking off the end of year spending season is Halloween. Just how much do Americans spend on trick-or-treating and other Halloween festivities? The National Retail Federation (NRF) forecasts total Halloween spending—including candy, costumes, and decorations—to come in at $7.4 billion this year.
That 7.4 billion dollars includes 2 billion dollars for Halloween candy and 350 million dollars for pet Halloween costumes.
Yes, you read that correctly. We are collectively going to spend 350 million dollars on Halloween costumes for our cats and dogs.
Overall, spending on Halloween has risen by more than 55 percent since 2005. It just seems like Americans can’t get enough of this particular holiday.
But of course what Americans spend on Halloween is not even worth comparing to what Americans spend on Christmas.
According to the National Retail Federation, more than 90 percent of Americans celebrate either Christmas, Kwanza or Hanukkah.
And Christmas in particular has become virtually synonymous with materialism. This year, the National Retail Federation is projecting that Americans will spend more than 600 billion dollars just on Christmas.
That represents a huge chunk of our GDP as a nation.
Most of that money will be spent on Christmas gifts. According to a Gallup survey that was just released, the average U.S. adult plans to spend 781 dollars on Christmas gifts this year, which is significantly up from last year…
Americans’ initial estimates of the total amount they will spend on Christmas gifts this year point to an above-average holiday season for the nation’s retailers. While Gallup’s October spending forecast is a warm-up to its key measure in November, it finds Americans expecting to spend $781, on average, up from $704 last November.
Of course holiday spending does not end there. There are trees to put up, packages to send out and decorations to buy. The following numbers are from a Forbes article about what an average American typically spends during a Christmas season…
Christmas Tree: $41.50
Cards And Postage: $32.43
Floral Arrangements: $22.61
Food And Candy: $95.04
So where is all of this money coming from?
That is a key question.
If our incomes were going up, all of this spending might be good news. But as the following chart from the Federal Reserve demonstrates, that is not the case…
Our incomes are stagnant at best. But Americans always like to party as if it were the best of times. So they will pull out their credit cards and spend what they feel they need to spend in order to feel happy once again this year.
But deep down most people realize that this debt-fueled party cannot last forever.
Deep down most people realize that we have some incredibly serious long-term problems that need to be fixed.
Sadly, no matter which political party occupies the White House, and no matter which political party controls Congress, our long-term problems only seem to get even worse.
As our problems have multiplied, over time Americans have become angrier and angrier.
And right now is election season, and so that is very bad news for Democrats…
Nearly 7 in 10 Americans are angry at the direction the country is headed and 53% of Americans disapprove of President Barack Obama’s job performance, two troubling signs for Democrats one week before the midterm elections, a new CNN/ORC International Poll shows.
Democrats are battling to try and save the Senate majority, while hoping to prevent more losses in the House, which the GOP controls by a 234 to 201 margin.
In the Senate, Republicans need a net gain of six seats, and several state polls in the past month of contested races show that Democrats are in danger of losing control of the majority, and thus Congress.
If the Republicans do take control of both houses of Congress, will that fundamentally change the direction of the country?
I wish that I could believe that, but at this point most Republicans are virtually indistinguishable from most Democrats.
In other words, it is very hard to tell them apart.
As a nation, we are steamrolling toward a date with oblivion, but everyone is trying to put such a happy face on things.
Well, enjoy this time of relative stability while you can, because it is going to end way too soon.
The idea that the Obama administration has the budget deficit under control is a complete and total lie. According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014. But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated. If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny. On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32. As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37. That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months. We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation.
The chart that I have posted below shows the exponential growth of the U.S. national debt over the past several decades. Anyone that would characterize this as “under control” is lying to you…
This is the greatest government debt bubble in the history of the world, but very few people seem to have any desire to do anything about this anymore. We are literally gorging on debt, and most Americans seem to think that it is just fine and dandy.
Perhaps that it is because we have never really experienced any serious consequences for going into so much debt yet.
But when it comes to running up debt, a day of reckoning always comes eventually.
Just ask Greece.
And the absolutely insane spending policies of this administration and this Congress are hastening the day when our day of reckoning will arrive.
Consider the following facts…
-The U.S. national debt has increased by more than 7 trillion dollars since Barack Obama has been in the White House. By the time Obama’s second term is over, we will have accumulated about as much new debt under his leadership than we did under all of the other U.S. presidents in all of U.S. history combined.
-The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first established in 1913.
-If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.
-Right now, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
-In August, the average rate of interest on the government’s marketable debt was 2.028 percent. In January 2000, the average rate of interest on the government’s marketable debt was 6.620 percent. If we got back to that level today, we would be paying well over a trillion dollars a year just in interest on the national debt.
-At this point the U.S. government has accumulated more than 200 trillion dollars of unfunded liabilities that will need to be paid in future years. In other words, we have made more than 200 trillion dollars worth of promises that we do not have money for yet.
Thomas Jefferson once said that “the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
What we are doing to future generations is absolutely unconscionable. We are stealing trillions upon trillions of dollars from our children and our grandchildren, and we are willingly consigning them to a lifetime of debt slavery.
I have said this before, but it bears repeating. If future generations get the chance, they will look back and curse us for what we have done to them.
And shame on anyone that would dare to suggest that we should continue to run up more debt that future generations will be expected to repay.
But government debt is far from the only massive debt bubble that we are dealing with as a country.
40 years ago, the total amount of debt in our nation (all government debt plus all business debt plus all individual debt) was sitting at a grand total of about 2.3 trillion dollars.
Today, that total has grown to 59.4 trillion dollars.
As the chart posted below shows, our total debt bubble is now more than 25 times larger than it was just 40 years ago…
If you were to take all forms of debt in our country and divide it up equally to each person, the average family of four would owe approximately $735,000.
This is not anywhere close to being sustainable, but most Americans don’t seem to care. They just continue to recklessly run up even more debt.
However, there are signs that we are starting to hit a wall with all of this debt.
For example, an astounding 35 percent of all Americans have debts that are so overdue that they have been referred to collection agencies.
Our nation has become an ocean of red ink from sea to shining sea, and the only way to keep the bubble from bursting is for the total amount of debt to continue to grow much faster than the overall economy is growing.
Obviously this cannot happen indefinitely, and when this house of cards comes crashing down it is going to be absolutely horrific. For much more on all of this please see my previous article entitled “The United States Of Debt: Total Debt In America Hits A New Record High Of Nearly 60 Trillion Dollars“.
The big question is how long our “bubble economy” can keep going before it finally collapses.
It has gotten to the point where even some of the biggest banks in the world are admitting that what we have been doing is completely and totally unsustainable. Just consider the following excerpt from a recent article by Joshua Krause…
Recently, strategists for Deutsche Bank released a startling study in regards to government debt. They decided to investigate whether or not the bond market is currently in a bubble. What they found was, unlike previous eras, the past 20 years has seen no lag between economic booms and busts:
It has long been our view that over the last couple of decades the global economy has rolled from bubble to bubble with excesses never fully being allowed to unravel. Instead aggressive policy responses have encouraged them to roll into new bubbles.
This has arguably kept the modern financial system as we know it a going concern. Clearly there have always been bubbles formed through history but has there been a period like the last 20 years where the bursting of one bubble has consistently led directly to the formation of the next?
Essentially, our current system has been dying a very slow death. It’s running out of steam.
Sadly, most Americans have no idea that we are living in a giant debt-fueled bubble that has a limited lifespan.
Most Americans just assume that since the politicians tell them that everything is going to be okay that they don’t need to be concerned about any of this.
But every single day our debts get even larger and our long-term financial problems get even worse.
Someday this bubble is going to burst and then all hell will break loose.
It is just a matter of time.
Did you know that 77 million Americans have unpaid debts that are “in collections” and that Congress is actually thinking about letting post offices offer payday loans? We live in a country where almost everyone is drowning in debt and where most people are either flat broke or very close to flat broke. Years ago, “your Mama is so broke” jokes were all the rage, and at the rate we are going they could make a big comeback. Some of my favorites were “your Mama is so broke she went to McDonald’s and put a milkshake on layaway” and “your Mama is so broke your family ate cereal with a fork to save milk”. Unfortunately, the facts that I am about to share with you are not funny at all. In fact, they are quite sobering. Yes, things are going fairly well for the elitists that live in the good areas of New York City, Washington D.C. and San Francisco right now, but most of the country is deeply struggling as our economic fundamentals continue to crumble. Please share these numbers with as many people as you can, because we need people to understand that there has not been an “economic recovery” for most of America. In fact, in many ways things just continue to get even worse. The following are 21 ways to end the phrase “Americans are so broke”…
1. Americans are so broke that about a third of them have debt collectors on their heels. One recent study discovered that more than one out of every three adults in the United States has an unpaid debt that is “in collections“. That is a total of 77 million people. In other words, the debt collection business in America is absolutely booming.
2. Americans are so broke that Congress is now actually considering allowing post offices to provide payday loans and check cashing services.
3. Americans are so broke that they are keeping their vehicles longer than ever. The average age of vehicles on America’s roads recently set a new all-time high of 11.4 years.
4. Americans are so broke that car dealers are having to go to extreme lengths to get new customers. Last year, one out of every four auto loans in the United States was made to someone with subprime credit.
5. Americans are so broke that 52 percent of them cannot even afford the homes that they are living in right now.
6. Americans are so broke that they are falling farther behind on their student loans than ever. The total amount of student loan debt in the U.S. has now reached a whopping 1.2 trillion dollars, and approximately seven million Americans are in default on their student loans at this point.
7. Young Americans are so broke that half of all college graduates are still relying on their parents financially when they are two years out of school.
8. Young Americans are so broke that only 36 percent of American adults under the age of 35 currently own a home. That is the lowest level that has ever been recorded.
9. Americans are so broke that many of them can’t even afford to shop at Wal-Mart and dollar stores anymore…
Discount stores are slowly dying.
Yesterday, Dollar Tree announced it would buy Family Dollar, a chain that is in the process of closing hundreds of stores and firing workers.
Other discount stores have been struggling as well, writes Heidi Moore at The Guardian. Fashion discounter Loehmann’s filed for bankruptcy, while Wal-Mart’s sales have declined for the past five quarters.
“There’s just not enough money deployed by American families to keep all the discount chains in business,” Moore writes.
10. Americans are so broke that they are running up record levels of debt. Overall, U.S. households are 11.68 trillion dollars in debt right now.
11. Americans are so broke that the wealth of the “typical American household” has fallen by 36 percent over the past decade.
12. Americans are so broke that one out of every four part-time workers in America is living below the poverty line.
13. Americans are so broke that more than 37 million Americans are now being served by food pantries and soup kitchens.
14. Americans are so broke that there are 49 million Americans that are dealing with food insecurity.
15. Americans are so broke that the number of people on food stamps has increased by about 14 million while Obama has been in the White House. Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin. But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.
16. Americans are so broke that the U.S. government has had to spend an astounding 3.7 trillion dollars on welfare programs over the past five years.
17. Americans are so broke that more than 20 percent of all children in the U.S. are living in poverty.
18. Americans are so broke that we have a record number of kids sleeping in the streets. In fact, we have more than a million public school children that are homeless at this point.
19. Americans are so broke that 76 percent of all Americans are living paycheck to paycheck.
20. Americans are so broke that 26 percent of Americans have absolutely no emergency savings whatsoever.
21. Americans are so broke that approximately two-thirds of all Americans do not have enough money saved up to cover six months of expenses if an emergency arose.
If things are this bad now, during the so-called “economic recovery”, how bad will things get during the next major economic downturn?
Unfortunately, most Americans have been lulled into a false sense of security. The financial crisis of 2008 seems like ancient history to most of them now, and most people appear to believe that our leaders have “fixed” whatever was wrong the last time.
Of course that is not the case at all. In fact, our long-term problems have just continued to grow since then.
The truth is that what we are experiencing right now is about as good as things are going to get for the U.S. economy. When the next crisis arrives, all of the numbers in the list above are going to rapidly get a lot worse.
So enjoy the rest of this “bubble” while you still can. It certainly will not last for too much longer.
One of the things that this era of American history will be known for is conspicuous consumption. Even though many of us won’t admit it, the truth is that almost all of us want a nice vehicle and a large home. They say that “everything is bigger in Texas”, but the same could be said for the entire nation as a whole. As you will see below, the size of the average new home has just hit a brand new record high and so has the size of the average auto loan. In the endless quest to achieve “the American Dream”, Americans are racking up bigger debts than ever before. Unfortunately, our paychecks are not keeping up and the middle class in the United States is steadily shrinking. The disparity between the lifestyle that society tells us that we ought to have and the size of our actual financial resources continues to grow. This is leading to a tremendous amount of frustration among those that can’t afford to buy expensive cars and large homes.
I remember the days when paying for a car over four years seemed like a massive commitment. But now nearly a quarter of all auto loans in the U.S. are extended out for six or seven years, and those loans have gotten larger than ever…
In the latest sign Americans are increasingly comfortable taking on more debt, auto buyers borrowed a record amount in the first quarter with the average monthly payment climbing to an all-time high of $474.
Not only that, buyers also continued to spread payments out over a longer period of time, with 24.8 percent of auto loans now coming with payment terms between six and seven years according to a new report from Experian Automotive.
That’s the highest percentage of 6 and 7-year loans Experian has ever recorded in a quarter.
Didn’t the last financial crisis teach us about the dangers of being overextended?
During the first quarter 0f 2014, the size of the average auto loan soared to an all-time record $27,612.
But if you go back just five years ago it was just $24,174.
And because we are taking out such large auto loans that are extended out over such a long period of time, we are now holding on to our vehicles much longer.
According to CNBC, Americans now keep their vehicles for an average of six years and one month.
Ten years ago, it was just four years and two months.
My how things have changed.
And consumer credit as a whole has also reached a brand new all-time record high in the United States.
Consumer credit includes auto loans, but it doesn’t include things like mortgages. The following is how Investopedia defines consumer credit…
Consumer credit is basically the amount of credit used by consumers to purchase non-investment goods or services that are consumed and whose value depreciates quickly. This includes automobiles, recreational vehicles (RVs), education, boat and trailer loans but excludes debts taken out to purchase real estate or margin on investment accounts.
As you can see from the chart below, Americans were reducing their exposure to consumer credit for a little while after the last financial crisis struck, but now it is rapidly rising again at essentially the same trajectory as before…
Have we learned nothing?
Meanwhile, America also seems to continue to have an insatiable demand for even larger homes.
According to Zero Hedge, the size of the average new home in the United States has just hit another brand new record high…
There was a small ray of hope just after the Lehman collapse that one of the most deplorable characteristics of US society – the relentless urge to build massive McMansions (funding questions aside) – was fading. Alas, as the Census Bureau today confirmed, that normalization in the innate desire for bigger, bigger, bigger not only did not go away but is now back with a bang.
According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.
And while it is known that in absolute number terms the total number of new home sales is still a fraction of what it was before the crisis, the one strata of new home sales which appears to not only not have been impacted but is openly flourishing once more, are the same McMansions which cater to the New Normal uberwealthy (which incidentally are the same as the Old Normal uberwealthy, only wealthier) and which for many symbolize America’s unbridled greed for mega housing no matter the cost.
There is certainly nothing wrong with having a large home.
But if people are overextending themselves financially, that is when it becomes a major problem.
Just remember what happened back in 2007.
And just like prior to the last financial crisis, Americans are treating their homes like piggy banks once again. Home equity lines of credit are up 8 percent over the past 12 months, and homeowners are increasingly being encouraged to put their homes at risk to fund their excessive lifestyles.
But there has been one big change that we have seen since the last financial crisis.
Lending standards have gotten a lot tougher, and many younger adults find that they are not able to buy homes even though they would really like to. Stifled by absolutely suffocating levels of student loan debt, many of these young adults are putting off purchasing a home indefinitely. The following is an excerpt from a recent CNN article about this phenomenon…
The Millennial generation is great at many things: texting, social media, selfies. But buying a home? Not so much.
Just 36% of Americans under the age of 35 own a home, according to the Census Bureau. That’s down from 42% in 2007 and the lowest level since 1982, when the agency began tracking homeownership by age.
It’s not all their fault. Millennials want to buy homes — 90% prefer owning over renting, according to a recent survey from Fannie Mae.
But student loan debt, tight lending standards and stiff competition have made it next to impossible for many of these younger Americans to make the leap.
This is one of the primary reasons why homeownership in America is declining.
A lot of young adults would love to buy a home, but they are already financially crippled from the very start of their adult lives by student loan debt. In fact, the total amount of student loan debt is now up to approximately 1.1 trillion dollars. That is even more than the total amount of credit card debt in this country.
We live in a debt-based system which is incredibly fragile.
We experienced this firsthand during the last financial crisis.
But we just can’t help ourselves.
We have always got to have more, and society teaches us that if we don’t have enough money to pay for it that we should just go into even more debt.
Unfortunately, just as so many individuals and families have found out in recent years, eventually a day of reckoning arrives.
And a day of reckoning is coming for the nation as a whole at some point as well.
You can count on that.