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We Might As Well Face It – America Is Addicted To Debt

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Debt Tree - Public DomainCorporations, individuals and the federal government continue to rack up debt at a rate that is far faster than the overall rate of economic growth.  We are literally drowning in red ink from sea to shining sea, and yet we just can’t help ourselves.  Consumer credit has doubled since the year 2000.  Student loan debt has doubled over the course of the past decade.  Business debt has doubled since 2006.  And of course the debt of the federal government has doubled since 2007.  Anyone that believes that this is “sustainable” in any way, shape or form is crazy.  We have accumulated the greatest mountain of debt that the world has ever seen, and yet despite all of the warnings we just continue to race forward into financial oblivion.  There is no possible way that this is going to end well.

Just the other day, a financial story that USA Today posted really got my attention.  It contained charts and graphs that showed that business debt in the U.S. had doubled since 2006.  I knew that things were bad, but I didn’t know that they were this bad.  Back in 2006, just prior to the last major economic downturn, U.S. nonfinancial companies had a total of about 2.6 trillion dollars of debt.  Now, that total has skyrocketed to 5.8 trillion

Companies are sitting on a record $1.82 trillion in cash. That might sound impressive until you hear companies owe three times more – $5.8 trillion, according to a new report from Standard & Poor’s Ratings Services.

Debt levels are soaring at U.S. non-financial companies so quickly – total debt outstanding rose $650 billion in 2014, which is six times faster than the $100 billion in added cash.

So are we in better condition to handle an economic crisis than we were the last time, or are we in worse shape?

Let’s look at another category of debt.  According to new data that just came out, the total amount of student loan debt in the U.S. is up to a staggering 1.2 trillion dollars.  That total has more than doubled over the past decade…

New data released by The Associated Press shows student loan debt is over $1.2 trillion, which is more than double the amount of a decade ago.

Students are facing an average of $35,000 in debt, that’s the highest of any graduating class in U.S. history. A senior at University of Colorado, Colorado Springs, Jon Cheek, knows the struggle first hand.

“It’s been a pretty big concern, I work while I go to school. I applied for a bunch of scholarships and done everything I can to try and keep it low,” said Cheek.

And of course it isn’t just student loan debt.  American consumers have had a love affair with debt that stretches back for decades.  As the chart below demonstrates, overall consumer credit has more than doubled since the year 2000…

consumer credit outstanding

If our paychecks were increasing at this same pace, that would be one thing.  But they aren’t.  In fact, real median household income is actually lower today than it was just prior to the last economic crisis.

So American households should actually be cutting back on debt.  But instead, they are just piling on more debt, and the financial predators are becoming even more creative.  In a previous article,  I discussed how many auto loans are now being stretched out for seven years.  At this point, the number of auto loans that exceed 72 months is at an all-time high

The average new car loan has reached a record 67 months, reports Experian, the Ireland-based information-services company. The percentage of loans with terms of 73 to 84 months also reached a new high of 29.5% in the first quarter of 2015, up from 24.9% a year earlier.

Long-term used-vehicle loans also broke records with loan terms of 73 to 84 months reaching 16% in the first quarter 2015, up from 12.94% — also the highest on record.

When will we learn?

The crash of 2008 should have been a wake up call.

We should have acknowledged our mistakes and we should have started doing things very differently.

But instead, we just kept on making the exact same mistakes.  In fact, our long-term financial problems have continued to accelerate since the last recession.  Just look at what has happened to our national debt.  Just prior to the last recession, the U.S. national debt was sitting at approximately 9 trillion dollars.  Today, it is over 18 trillion dollars…

National Debt

Our debt has grown so large that we will never be able to get out from under it.  This is something that I covered in my recent article entitled “It Is Mathematically Impossible To Pay Off All Of Our Debt“.  Because of our recklessness, our children, our grandchildren and all future generations of Americans are consigned to a lifetime of debt slavery.  What we have done to them is beyond criminal.  If we lived in a just society, a whole bunch of people would be going to prison for the rest of their lives over this.

During fiscal year 2014, the debt of the federal government increased by more than a trillion dollars.  But in addition to that, the federal government has more than seven trillion dollars of debt that must be “rolled over” every year.  In other words, the government must issue more than seven trillion dollars of new debt just to pay off old debts that are coming due.

As long as the rest of the world continues to lend us enormous mountains of money at ridiculously low interest rates, we can continue to keep our heads above the water.  But this can change at any time.  And once it does, interest rates will rise.  If the average rate of interest on U.S. government debt was to return to the long-term average, we would very quickly find ourselves spending more than a trillion dollars a year just on interest on the national debt.

The debt-fueled prosperity that we are enjoying now is not real.  It is a false prosperity that has been purchased by selling future generations into debt slavery.  We have mortgaged the future to make our own lives better.

We are addicts.  We are addicted to debt, and no matter how many warnings we receive, we just can’t help ourselves.

Shame on you America.

  • jo6pac

    Well being on SS and small pension the my main goal is no debt and so far I’ve been successful but some many others are not. Sad.
    Thanks MS

    • df NJ

      What does “pension” mean. I never heard of that word.

      • jo6pac

        From a long time ago, now for sure a forgotten settlement of hard work.

      • Ray

        To me Pension, it’s a bad word. The word alone invoked years and years of differences and sometimes fights with my dad. Before he died we were estranged 5 years. He never got it that times had changed since he retired in the 1980’s at 42 years old as a policeman with a 3000 a month pension. He kept wondering why I was cooking and working driving a Limo and working at warehouses to get by to take care of my family. He started looking at me as though I didn’t succeed at life and that me and my wife were letdowns. For years and years he told me to go get that good job with a pension, that was the way to be like him and have it all at 42. I constantly disagreed with him and kept trying to show him how it was different now, a global economy and all the problems we have from it, that he was a dinosaur and lucky to have had it the way he did. We eventually parted ways over our differences.
        Then the recession hit in 2008, Limos dried up, the race for offshoring culminated and I eventually was laid off collecting unemployment. I look around now and the older folks and boomers seem to be the only ones with any money left. They must have one of those Greek pensions I say to myself as I push 40 myself.

  • Hal Stromwer

    All systems that consume more than they produce go bankrupt in time. America will be no exception. Though there are many many good people in America, the soul of the country is rotted out.

    Our leaders are criminals and wierdos. Bush was bad enough, but when the loser from Chicago got elected I knew we were doomed. Only a populace of mindless fools would hire a racist nobody scumbag like Obama Hussien Bin Biden.

    When gay marriage and transvestites are held up as roll models you know the collective brain is dead. Only a fruit loop would believe in such nonsense, and as the mind is altered it alters all. We are screwed. America is now an idiocracy…..watch the movie.

    • T.

      “Let’s see, I’ve got this degree in Social Media and $38,000 in student loan debt. Meomyoh, my job at Wendy’s is only paying 7.50 an hour and the management position doesn’t look too good either. Man – This whole college degree plan stuff is a big joke – On me.”
      “I owe, I owe and off to Wendy’s I go.”

      • ray

        There isn’t even going to be any Wendy’s soon, period.

        • T.

          Righto. Did you hear? Gap closing 25% of its stores – Laying off Thousands – Ain’t it great?
          I owe; I owe it’s off to Gap I go – Oh no.

          • Mike Smithy

            But, but, but….Cramer at CNBS told me the economy is awesome.

          • Gold Stars

            He just did not specify for whom it is awesome! :(

        • Mondobeyondo

          McDonald’s will probably buy out Wendy’s eventually…

      • krinks

        The worst part of it all is that some Democrats recognizes that some students will never be able to repay their student debt having not been able to find gainful employment. They want students to be able to discharge the debt through bankruptcy but Republicans refuse to even allow this to come up for debate. As a lifelong conservative Christian, once I heard this I vowed to never vote Republican again. Imagine a generation of debt slaves.

        • Chell

          Yes student loans should be bankruptable. I agree completely. Perhaps then loan servicers would be a little more choosy about how much money they let students borrow for school. It really is wrong to make it almost impossible to discharge this debt.

          Some say this will allow people to take advantage of the system. But as long as there is a system people will always take advantage of it.

          If the cost of education went down, it would be more affordable for people to get their worthless bachelor degree in liberal arts, music, etc and still be able to repay with their wait job once they graduate.

          Worried about doctors, lawyers repaying? Then make a percentage of their income required to go to repayment and if they do not pay they lose their license to practice.

          Maybe they should also get a portion of debt forgiven for all pro bono cases they see/treat.

          • krinks

            The key point that most people forget is that the Lord himself set up a year of Jubilee in which every 7 years all debts were forgiven and all land returned to the original owners. This way no one was a permanent debt slave and there was no such thing as a 1% banker taking advantage of everyone.

          • T.

            Both parties have Damned U.S. krinks.
            One is “Damned if you do” and the other is “Damned if you don’t” – pick ’em.

          • robert h siddell, jr

            That god’s rule only applies to the chosen people; they consider Gentiles to be in the same category as cattle (Goyim).

          • Quetzol-43

            Economic downturn every 7 years… Coincidence? Not!

        • Gold Stars

          What is always overlooked about the student debt is how the government is the one responsible for “federally backed” student debt not being discharged through bankruptcy.
          It is no different than owing the IRS money on taxes. One cannot get out from under that debt either!
          Who could we trace this all back to I wonder, why a Democrat!! Woodrow Wilson to be exact, the first Progressive to be elected president.
          Just remember, when the government “insures” something, YOU are the one on the hook for that. Not some nebulous third party, but you!!
          What do you think would happen if all of the student debt was cancelled?
          Why do you think student loan debt is so high?
          Why do you think “higher education”, “education” in general is so expensive now?
          Give you two guesses, but the answer is the easy money the government throws at “education”.
          If the money was tighter and education performance based, instead of tenure and union based , we would have much better schools, cheaper schools and much, much less debt. Student loan wise and otherwise, the money would have to be spent more wisely, not like the drunken sailors all of education tends to emulate!!

          • krinks

            In the end any explanation that doesn’t allow for a discharge through bankruptcy is hate speech that the Lord himself was against. After all he commanded all debts be forgiven every 7 years. Look it up.

          • Gold Stars

            Here is hate speech for you. You are a total idiot!!!!!!!!!

        • Quetzol-43

          You heard that from whom?

    • Anon

      I’m shocked how stupid the average American has become. Not saying that I am sharp as I am a product of public schools, but I have to say that the other day at the bank has really opened my eyes. I thought that this lack of basic knowledge and intelligence only affected the younger generation (which I’m defining as 35 and under), but I’ve witnessed people older than 35 not know how to spell caterpillar, manure, or indicative. Mind you, many of these people are educators in the public school system. I am aware of why we have run into this problem, but it is still jarring to see how all of this dumbing down is affecting most Americans.

      • krinks

        It is not ignorance so much as propaganda. As Hitler said a lie becomes truth through nothing more than keep repeating said lie until people believe it. Look at how many have fallen for the global warming hoax even though there hasn’t been warming for 20 years and they had to change the name of the problem to climate change to get past this problem.

        • Quetzol-43

          Funny thing is, Hi tler said that about the tactics mainstream medias of Germany of the early 1920s, already back in 1923 Germany the mainstream medias served only the bankers and politicos!

  • Mike Smithy

    I have an idea for the “Back to the Future” series. Marty and Doc go back in time and kill John Maynard Keynes in an effort to save humanity from this economic dystopia.

    • Nemnor

      “Time Travel” is possible, ONLY if what we perceive as reality is really all an ILLUSION. And then, even with reality being all an “illusion”, “Time Travel” would then be in “reality” that is just like in a “stage show” or “movie” – which can be played over and over, and even have alternate beginnings, endings and alternate “versions” of any part of the “stage show”/”movie”.

      But, IF “reality” is basically REAL (i.e. you (Mike Smithy) really DID write the above blog post that I (now) really DID reply to), then NOTHING can change that “reality”.

      However, there can be the APPEARANCE of going back in time (like how you may replay a “stage show” or watch a “movie”, with or without alternate endings), as we “stretch” our minds a bit and imagine an “all powerful” Being/Force who/that is able to basically RESET all of “reality” (i.e. like replaying/resetting a “stage show”) on any given planet or even in an entire galaxy or universe. Similarly to how one might build a “sand castle” then destroy it (or let it be washed away) then build another “sand castle” (even as the previous “sand castle” is “forgotten”).

      In brief, IF “reality” as you perceive it is indeed BASICALLY REAL (e.g. IF you really do exist), and therefore “reality” is not all an ILLUSION, then what is done is ALWAYS really done, and therefore, “Time Travel” is always a fantasy.

  • A Friend

    And let us not forget the wonderful Obamacare subsidies that contribute to our imbalanced budget and crushing debt. Exactly how will we as a nation pay for that program? We can’t! The politicians that pushed the legislation through should be tarred, feathered, and hug on a noose. Obama desperately wants to be remembered for something, even this healthcare fiasco that mostly everyone who has half a brain hates. Yes, he will be remembered. He will be remembered as the worst President in History.

    • df NJ

      Maybe we need to cut military spending for a change.

      • jakartaman

        You can’t spend all your $$$ if you are dead or trying to live under sharia law. I would rather be poor and secure – thank you!

        • S.M,

          What does sharia law have to do with the subject of debt? What point are you trying to make?

          • df NJ

            Most religions cut off bankers heads for excessive usury. I long for the old days.

          • Nemnor

            And, as we all know “Usury” means – The practice of lending money and charging the borrower interest, especially at an exorbitant or illegally high rate.

            Usury is one of the “natural” and “normal” practice in the world-wide Capitalist system. Being a system that is based upon the exploitation of man by man and country by country, Usury comes “naturally” with the Capitalist banking system.

          • BernieAK

            Nemnor,

            Stop with your communist propaganda. Time and time again I hear you spew out that all our woes are a result of Capitalism, when Capitalism has never even been tried in it’s intended form. The system we have in place right now is Fascism, not Capitalism.

            The programs instituted by the Government have (un)intended consequences on the free market. Typically, whatever the Government has a hand in, gets destroyed or distorted. The free market has never had a chance to right itself as the Government/Fed are always there to save the day and misappropriate resources pouring gasoline on a fire to try and put it out.

            The woes of today and the financial breakdown can NOT be blamed on a decadent Capitalist society rather than a kleptocratic Government looking out for themselves and the too-big-to-fail they ONLY represent.

          • Gold Stars

            Well said, but will the idiot nemo listen???

          • sharonsj

            Does this mean I can shoot the people at Master Card who are charging me 30% interest? Sounds good to me.

          • Annoyingandlovingit

            So, you want to kill people. No surprise

          • jakartaman

            If we lost WWII you would be speaking German.
            If we do not SPEND $$ to keep a strong military- MAYBE you will be speaking arabic and living under sharia law – Does that help!!!

          • Dmitriy Gaydukov

            First of all you should know, that USA couldn’t lose to Germany, because 80% of all German fighting was with USSR, so maybe you would speak Japanese, but definitely not German.
            And second, Sharia law. I read some of your comments, you look like wise man, don’t you understand that all of this charade of isis, al-qaeda and other terrorists it’s just pet projects of USA, and part of it’s military budget?

          • Gay Veteran

            ROFLOL, we spent $TRILLIONS in Iraq and LOST.
            we couldn’t even defeat a bunch of goat herders in Afghanistan.
            but the war profiteers appreciate your support

          • Annoyingandlovingit

            We cant afford your ideas either

          • Gay Veteran

            thank you for contributing to the discussion on American debt.

          • Annoyingandlovingit

            thank you for contributing to the discussion on American debt.

      • alan

        We need those planes that fly backwards.

        • df NJ

          What we really need is an aircraft carrier that can fly. I think I saw one in a movie once. That would really be worth engineering.

      • https://m.youtube.com/watch?v=Xbp6umQT58A Tragedy_Of_Serious?

        Then how can we invade countries that have our oil under their lands! And kill millions so we can free their oil up! You know, cause their oil needs freedom!

      • smoke57

        What do you mean? We always have to create our own enemies to support the military industrial complex.

        • https://m.youtube.com/watch?v=Xbp6umQT58A Tragedy_Of_Serious?

          How dare you! Oil has been used and abused by the Middle East and now it is up to AMERICA TO FREE OIL! And kill 100s of thousand of not innocent Iraqi civilians!

          • df NJ

            I’m must amazed by the super human powers of ISIS. Every week they steal this they steal that. They conquer this city they conquer that city. They now have a dirty bomb and they just started work on their own aircraft carrier. It’s just amazing. Just when you thought peace might start breaking out ISIS comes along and we have to DOUBLE our military spending. Bad luck for us I guess.

          • https://m.youtube.com/watch?v=Xbp6umQT58A Tragedy_Of_Serious?

            You know as much as I do that we did not go to Iraq to fight for their freedom! The same could be said about afghan! Yes the CIA funded al qaede and yes the CIA is funding Isis! They want to drum up support for another war in the Middle East! That’s were it get difficult to predict how this will play out! They want war with Iran cause Iran is in the process of ridding the petro dollar and only excepting gold for their oil! So the question becomes, how do you get a war in Iran when Isis is in Iraq and Syria! Well, Syria is Irans ally! And they are bound by an agreement of some kind to fight if the other is attacked!So….We would have to do it by Syria in order to ‘free’ the middle east again! Am I wrong? I hope so!

          • Mike Smithy

            At present, the USA is using ISIS as a proxy army to oust President Assad from Syria.

          • A Friend

            “Every week they steal this they steal that.” That is quite a funny comment – and put into words what I’ve been thinking a lot lately. In my opinion, they (whoever they are) look to the USA to be the planet’s step in police force. Let’s swoop in there yet again with the war machine.

          • Gay Veteran

            don’t forget about all those invisible Russian tanks going into Ukraine

    • smoke57

      Obamacare is not perfect. What would you recommend for someone who is in good health that cannot get healthcare for “potential” pre-existing condition?

      • A Friend

        Yes I agree. The prior way that bumped people off insurance due to existing conditions was a problem for the insured. Hey Bob I have an idea….lets fix this issue by writing legislation…and then….viola…create a whole new host of problems instead. (Sarcasm here).

      • Gold Stars

        Obamacare is so far down the field from perfect, let us call it what it is, a horrible government intrusion into everyone’s life, destined to destroy healthcare for all!!
        Instead of destroying everyone’s healthcare, a system could have been put into place just for those few with pre-existing conditions.

        Would cost a great deal less, would not be screwing the entire healthcare industry into the ground.

        • Gay Veteran

          OR apply anti-monopoly laws against every part of the medical field (insurance companies, hospitals, drug makers, etc.) and watch prices drop by 80% (h/t Karl Denninger)

          • Gold Stars

            How is that going to make any difference?
            Have you bothered to count how many hospitals there are, insurance companies, etc…?

          • Gay Veteran

            go to Karl Denninger’s website market ticker and educate yourself on the monopolistic practices of the medical industry

          • Annoyingandlovingit

            Karl Denninger rambles emotionally without all the facts. Just like you babykiller pedo

          • Gay Veteran

            thank you for contributing to the discussion on American debt,

          • Annoyingandlovingit

            thank you for contributing to the discussion on American debt,

          • Gold Stars

            Go back to indoctrinating someone that is as stupid as yourself!
            You write crap and I have no time for it!

          • Gay Veteran

            in other words you’re too stupid to read up on it

          • Gold Stars

            No, have and it is not worth reading again, it is lies and trash!

        • smoke57

          If I recall correctly, it started as a very workable program. Then the insurance companies realized a potential windfall and invaded with their lobbyists…anything new?

          • Gold Stars

            It never started as a workable program.
            However, government and lobbyist is nothing new.

  • jsmith

    I can’t remember where I found this quote about the 1929 crash: “Symptoms of impending crisis were overlooked mainly because the Wall Street sector were making a killing.” Overlooked sounds rather tame now, doesn’t it? I wonder if those Wall Street CEO’s are going to be jumping out of windows from tall buildings?

    • df NJ

      The 1929 crash was not the only problem. The bankers contracted the money supply 31% between 1929 and 1933 causing unbelievable amounts of human suffering. No money equals no commerce.

  • df NJ

    Henry Ford solved a lot problems in the economy when he doubled his worker’s wages. If you want fix this whole economy then the CEOs need to double worker’s wages. There will be no inflation because people have proven the first thing they do after a deep and long recession is pay off their debts. Once the workers get their debts under control raising interest rates will again control overheating. Right now we the Fed pushing the economy to go full speed and nothing is happening.

    google “henry ford doubled the wages of his employees”

    • df NJ

      In 1914, Henry Ford made a big announcement that shocked the country. It caused the financial editor at The New York Times to stagger into the newsroom and ask his staff in a stunned whisper, “He’s crazy, isn’t he? Don’t you think he’s crazy?”

      That morning, Ford would begin paying his employees $5.00 a day, over twice the average wage for automakers in 1914.

      In addition, he was reducing the work day from 9 hours to 8 hours, a significant drop from the 60-hour work week that was the standard in American manufacturing.

      According to an article (above) in the Post sponsored by the automaker, Ford arrived at the new wage scale during a meeting with his managers.

      He wrote on the board the Ford wage standards: minimum pay of $2.34 for a nine-hour day. He tossed down the chalk and said: “Figure out how much more we can give our men.”

      The Ford executives worked all day, cautiously adding 25¢ an hour, and then another 25¢. Every so often Ford walked back in, said: “Not enough,” and walked out.

      Finally they had doubled the basic pay—up to $4.80 a day. One man snapped, “Why don’t you make it $5 a day and bust the company right?”

      “Fine,” said Henry Ford. “We’ll do that.”

      A young reporter from the Times travelled to Detroit to learn more about this revolutionary move. His name was Edward Peter Garrett, but he wrote under the name Garet Garrett, which was how Post readers knew him when he was the magazine’s financial writer between 1922 and 1942.

      Arriving in Detroit, Garrett found the city’s manufacturers panicking and predicting various disasters. The higher wages would cause other employers to leave the city, they said. Carmakers who remained and tried to match Ford’s wages would go bankrupt. Ford employees would be “demoralized by this sudden affluence,” and, of course, Ford Motor Company would soon be bankrupt.

      Fortunately, Garrett was able to get an audience with Henry Ford and, over the course of two days, discuss the company’s revolutionary changes. He wrote of his extended interview with Ford in a 1952 book, The Wild Wheel. He recalled asking Ford why he raised wages when every other manufacturer was trying to reduce wages to the lowest acceptable figure. Ford believed he was buying higher quality work from all his employees. “If the floor sweeper’s heart is in his job he can save us five dollars a day by picking up small tools instead of sweeping them out.”

      Higher wages were necessary, Ford realized, to retain workers who could handle the pressure and the monotony of his assembly line. In January of 1914, his continuous-motion system reduced the time to build a car from 12 and a half hours to 93 minutes. But the pace and repetitiveness of the jobs was so demanding, many workers found themselves unable to withstand it for eight hours a day, no matter how much they were paid.

      But Ford had an even bigger reason for raising his wages, which he noted in a 1926 book, Today and Tomorrow. It’s as a challenging a statement today as it as 100 years ago. “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”

      It might have been just another of Ford’s wild ideas, except that it proved successful. In 1914, the company sold 308,000 of its Model Ts—more than all other carmakers combined. By 1915, sales had climbed to 501,000. By 1920, Ford was selling a million cars a year.

      “We increased the buying power of our own people, and they increased the buying power of other people, and so on and on,” Ford wrote. “It is this thought of enlarging buying power by paying high wages and selling at low prices that is behind the prosperity of this country.”

      In 1919, Ford raised his minimum wage again, this time to $6.00 a day. Again, the wage hike produced higher production numbers. Ford told Garrett, “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made, and the six-dollar-a-day wage is cheaper than the five. How far this will go we do not know.”

      He learned how far in 1929. In the aftermath of the stock market crash, he raised wages to $7.00 a day, hoping it would spark an economic recovery. But this time, it didn’t work. Orders fell, production slowed, hours were reduced. But Ford didn’t blame the workers for the sluggish economy. The fault lay in business leaders who were “continually putting the profit motive over what he called the wage motive.” Ford told Garrett, “When business thought only of profit for the owners ‘instead of providing goods for all,’ then it frequently broke down.”

      While it worked, though, Ford’s $5.00-a-day policy helped the company achieve record profits. It made its cars affordable to its workers (who could purchase a Model T with four months’ wages.) It helped put 15 million Americans behind the wheel of an automobile. And it set a standard for wages that, despite all the predictions of doom for the Ford Motor Company, every other car company eventually adopted.

      • Mike Smithy

        Undoubtedly, Henry Ford was a visionary. His standard for efficiency reminded of a recent trip I had at a local supermarket called Aldi. I was awe struck at how fast, friendly and efficient all of the cashier’s were. I made the point of asking one of the cashier’s about her job training and the company. She stated that her starting salary was considerably more than what Walmart was paying for a cashier position and one of the metrics pursuant to subsequent pay raises is checkout velocity.

        • Avner

          Aldi you can get non gmo food.

          Just look for the German flag. GMO’s are illegal in Europe on average

      • Nemnor

        Ford (and others like Ford) was successful with his “revolutionary’ ideas, mainly because US Capitalism was then on the “rise”, even while the world-wide Capitalist system was already into it’s decadent stage. Similarly to how China is/was on the “rise”, even while the world-wide capitalist system sunk into a deepened crisis (in an on-going crisis) in 2007-2008.

        Today, as the decadent world-wide Capitalist system continue to decay (relentlessly), the issue of over-production (which was much less acute, back in the days of Ford) ) makes it virtually impossible for the system to generate long-term recovery.

        Today, REGARDLESS to what businesses, Governments and Central Banks do or do not do (i.e. raise pay, reduce pay, do or not do like Ford did, etc.), any “recovery” would only be temporary (short-lived), as the Capitalist system in the USA (and the World in general) is now at a “dead end”.

        REAL (permanent) solutions are no longer possible within Capitalism. A fundamental change away from Capitalism is the only viable (permanent) solution.

    • K

      That solution will not work, in a rigged economy. Double worker’s wages. By the end of the week, food,gas, and rent would also double. By the end of the month everything else would double. When so much, is controlled by so few. There is no true competition left.

      • Bill

        Sad but true. Sheeple just don’t understand the power of numbers.

  • alan

    Its seems the banks are more than happy to accommodate. So it must be ok, they are the financial experts right?

    • Nemnor

      If this was not a sarcastic statement, the banks are simply part of the US Capitalist system (in whatever form it is now), so the banks will do as they always do (more or less).

      However, Michael stated – “…Consumer credit has doubled since the year 2000. Student loan debt has doubled over the course of the past decade. Business debt has doubled since 2006. And of course the debt of the federal government has doubled since 2007. Anyone that believes that this is “sustainable” in any way, shape or form is crazy…”.

      The truth is, REGARDLESS to what the Government, businesses, banks and the Federal Reserve do (or not do), and regardless to who is in the WH, all (or most of) the unpleasant facts Michael stated will become even worse, 5 or 10 years form now (even if there might be temporary “improvements” here or there).

      The reason things will continue to get worse is because, the main root cause of the major issues facing the USA (and the World) is, the world-wide Capitalist system itself – which is now at a “dead end” (mainly due to reaching a state of general over-production), and is now NOT able to generate long-term recovery by economic means alone.

      REAL (permanent) solutions to the major issues facing the USA (and the World), can NOT be found within the now decadent Capitalist economic system – which is (of course) ultimately, no a sustainable economic system.

      • Rich Shack

        Capitalism isn’t the problem, except for the “crony capitalists” who game the system. It is governments that spend more than they can afford and give unfunded mandates to their subjects.

        • Nemnor

          Rich Shack, now consider this – virtually every Republican and Democratic politician seem to think similar to you!

          So, from since the Great Depression of the 30s (and even before that) They ALL believe (similar to you) that “Capitalism isn’t the problem”. That it is just “cronyism” and other forms of “corruptions” that are preventing Capitalism from function properly. (right?)

          IF you agree that virtually every Republican and Democratic politician has the same (similar) knowledge and understanding about Capitalism as you do. Then the question is – How come (from since the 30s, or rather form since the early 70s) things are getting from bad to worse in the USA? How come NON of the US politicians (that thinks similar to you) seem to be able to solve the major economic issues in the USA?

          OR, if you say that they do NOT have your knowledge and understanding (about Capitalism), then the question is – why are there virtually NO politician with your knowledge and understanding (about Capitalism) in position of power, to then fix Capitalism? And, the same goes for all the “wise” ones in this blog who say – “Capitalism isn’t the problem”, why don’t YOU get into political power and PROVE that Capitalism is NOT decadent, by having Government spend ONLY what they can afford and by putting a (proper) muzzle on “cronyism” and other forms of “corruptions”?

          If you KNOW that Capitalism will work (i.e. that Capitalism is not decadent and is not the problem), then do the “patriotic” thing and get into political power, and use your “better” knowledge and understanding, and save the USA. Because things WILL get even worse in the USA (and the World), 5 or 10 years from now.

          Nevertheless, I posit that, for those who still believe that “Capitalism isn’t the problem”, much of your efforts to “save” the USA will ultimately be in VAIN, until you come to the knowledge of the TRUTH that – it is Capitalism itself, that is now decadent and the main root cause of the major economic issues facing the USA and the World.

      • Gold Stars

        Tell that to chairman Mao.
        What is the sustainable system?
        Capitalism in its pure form, without government intervention, is by far and away the best system.
        One reason it works, when left to its own devices is it never overproduces. It will always self correct, because it is driven by supply and demand.
        It is only when the supply and demand cycle is screwed with by some government hack does it get out of whack!
        The government decides to support, restrict, encourage, etc… and item and supply and demand are thrown out the window. Then people with little understanding claim Capitalism does not work.
        No it is government intervention that does not work!

        • Gay Veteran

          “…Capitalism in its pure form, without government intervention, is by far and away the best system….”

          until you get monopolies and environmental destruction because the true cost of production is not paid by the korporation

          • Annoyingandlovingit

            bilge

          • Gay Veteran

            thank you for contributing to the discussion on American debt

          • Annoyingandlovingit

            thank you for contributing to the discussion on American debt

          • Gold Stars

            Then is not capitalism, is it!
            Should really realize monopolies are only possible when the government authorizes them. Show me one that is not government sanctioned!

          • Gay Veteran

            from the Gilded Age we know it is the result of capitalism.

            government sanctioned?

            The Antitrust Laws

            “Congress passed the first antitrust law, the Sherman Act, in 1890 as a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.” In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which created the FTC, and the Clayton Act….”

          • Annoyingandlovingit

            bilge

          • Gay Veteran

            thank you for contributing to the discussion on American debt….

          • Annoyingandlovingit

            thank you for contributing to the discussion on American debt….

        • Nemnor

          Gold Stars, you stated – “…Capitalism in its pure form, without government intervention, is by far and away the best system… …One reason it works, when left to its own devices is it never overproduces. It will always self correct, because it is driven by supply and demand…”.

          Then if this “pure” form of Capitalism really did exist anywhere in the World, then WHY did it stop working? Why would people simply “throw away” a good thing?.

          ANY worthy/justifiable economic system must exist for and by the mass of the people. It can not exist in a vacuum and treat the mass of the people like “incidental objects”. It WAS, from time to time, the miserable failure of Capitalism (in any form) to meet the “rational” (genuine) needs of the masses, that “compelled” Governments to intervene. So, it was NOT the “interventions” that cause Capitalism to go wrong. But, rather Governments “intervene” as a reaction/response to the FAILURES of (“pure”) Capitalism.

          Saying that “pure” Capitalism never overproduces is ONLY in your imagination, and you do not understand what “drives” Capitalism to (eventually) overproduce.

          It was the SAME “pure” Capitalism (or whatever form Capitalism had in the past), that NATURALLY and inevitably became decadent, due to reaching a state of general over-production.

          IF Capitalism was “by far and away the best system (as you put it), then it is now time for Capitalism to be REPLACED by a superior and better economic system. A system that addresses the ABUNDANT needs of every the “rational” individual (and not just of “the 1%”).

          The truth is, this “pure” form of Capitalism (if it really did exist anywhere) would have been more so when Capitalism was on the rise and when it was indeed a progressive force, as it moved the World away from a Feudal/Agrarian economy to generally a Capitalist economy.

          However, now that Capitalism is decadent and at a “dead end”, there is NO going back to the “pure” (or “free market”) Capitalism that you believe (imagine) existed in the past.

          • Gold Stars

            Talking with an idiot as yourself is senseless, talking to a fucking commie is just stupidity!
            If you had actual read what I wrote, you did not, I clearly state the problem is “GOVERNMENT INVOLVEMENT”!
            Clear enough for you?

  • DesertPaine

    Seems that America’s debt is dangerously close to ‘moral hazard’ doctrine. Borrow gleefully since it can never be paid back anyway.

  • Tim

    Regarding our national debt, I’d like to mention something that isn’t currently receiving a lot of media coverage, probably because it’s nothing new. That is, there is currently a debt limit impasse. The federal government is employing certain “extraordinary measures” in order to avoid breaching the statutory debt limit. If you go to a site called Debt to the Penny and do a search of the daily federal debt outstanding for the past few months you’ll see that the federal debt has been “frozen” for a while now. So, later this year the federal government will have to raise the statutory debt limit, and when it does we can expect to see a significant increase in the debt.

  • K

    Modern society calls it normalcy bias. I prefer the previous term. Losing contact with reality. It used to be a mental disorder, that required treatment. So many sell the nonsense that, reality is whatever you want it to be. Worse yet so many have bought into it. If a people can not even agree on what constitutes reality, what chance do they have? You saw it during the last real estate boom. So called experts proclaimed, real estate can only go up. Some of us knew better. But look how many bought into it.

  • SunnyFlaSnotress

    “We are addicts. We are addicted to debt”
    Speak for yourself.. I’m debt-free.

    • DesertPaine

      High-five, Sunny. But debt-free is not scot-free. The cost of servicing debt is priced into everything we buy — and discounted against the receipts we bring in.

      But you have do e everything you can that is within your control. In any normal time that would be good enough.

    • moconserve

      …me too. Figured after the 08 crisis it was the only way to go.

  • jokyjo

    And the million dollar question is:

    How long can they keep kicking the can down the road?

    • Tim

      I’m utterly amazed that they’ve kicked the can as far as they have. When will this insanity end?

  • http://www.coroflot.com/joelpeeters/portfolio Joel Peeters

    Thanks for the article Michael.

    I think things are beginning to unfold rapidly now…

    From watch(dot)org

    — “JUNE 15, 2015

    Stocks fall globally as Greek talks collapse

    Stock markets around the world fell on Monday, suffering their first bout of significant contagion from the Greek crisis after 11th hour talks between the near bankrupt country and its creditors collapsed.

    The losses were broad across risk assets. Major stock indexes fell sharply, as did crude oil prices, while the euro weakened against the dollar. Gold and silver rose on the day.

    Talks on Sunday between Greece and its creditors – described as a last attempt to bridge their differences – broke up after less than an hour. European Union officials said Athens had offered no new concessions to secure the funding it needs, while Athens said it would not give in to demands for more pension and wage cuts. Greece must repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund by mid-year.

    Greece has already been bailed out twice and many banks have cut their exposure to the country while euro zone authorities have put in place mechanisms to limit contagion. However, the prospect of default and the possibility of Athens leaving the euro weighed heavily on investor sentiment.

    “It does look like a technical default is in sight at the end of the month and the market could see a significant pullback,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.” —

    • Mike Smithy

      Yes, it is a default. However, the banksters and their corrupt media shills won’t call it a default for fear of admitting defeat and spooking stawks.

  • Peter

    This is dumb, the fiat monetary system, is debt basted economy.
    There is not enough money (dollars) in existence to pay off the debt.
    Its impossible to pay off the debt, and if the debt was not growing, the economy stops. So why is this surprising or even news?.

  • toadsticker

    Hey Moneybeyondo, How about this lyric? “We didn’t start the fire. It was always burning since the world was turning.” – Billy Joel. And it keeps getting hotter and burning faster.

  • smoke57

    All the birds will come home to roost.

  • marc

    I believe it was quoted…I. don’t want a return on my money ..I. want my money returned …

    • nobody

      Your money? You never had any of it, you just have been leasing them from the feds.

  • tom

    Maybe everyone bought a bunker on their credit card?

    • df NJ

      Bunker is really good for catching bluefish and stripers.

  • Ideas time

    Good evening Michael,

    Why are you so worried about debt created out of thin air who have stolen the intrinsic value of everyone’s saving who trusted the system and worked for the fake money? That is all of us! Why do you call it debt? It has always been a con and a scam.

    Anyone who was smart would shut down the unconstitutional fed, and their partner in crime the Porto Rico Trust aka the i r s and claw back the assets purchased with with paper created out of nothing on a computer key?

    If you, Michael really want to make a difference, start exposing the real fraud.
    I always wonder why people are allowed to continue with blogs like this, but I have always noticed they never touch the core issues.

    Some may think while the reporting may be accurate, it is tainted by finance that limit the truth. Please show me I am wrong?

    • jaxon64

      Hey genius–see at the top of the page? All those tabs which link to past articles? Banksters, Federal Reserve, Govt debt etc etc–try clicking on one of those links and doing some research before you start with the small minded presumptions. Typical lazy American wanting their info spoon fed to them and zero effort at digging a bit for facts.

  • Guest

    I study law as a hobby, and according to my Black’s Law Dictionary and simple logic we do not have “money” to pay back our debts anyway. Before the federal reserve bill passed the country has money backed by gold. We all know this fact. However what most don’t understand is that the Federal Reserve violates Article 1, Section 10 and Article 6, Paragraph 2 of the Constitution. Because of this the money in this country is all counterfeit. Private person making it in their garage is no different than the private federal reserve making it in their building. Also, according to Article 6, paragraph 2 since it’s unconstitutional (violating Article 1, Section 8) this so called “debt” we have acquired should be null and void since it’s all unconstitutional to start with. But a “note” is a promise to pay back, essentially an IOU. Since the Fed has no gold backing anymore all of their “notes” are truly worthless, and they merely become debt instruments. And according to Article 1, Section 10 only gold and silver coin may be the tender to pay back debts in a State. So we can’t pay back our debt using “our” currency because it’s a debt! One cannot pay a debt with a debt.

  • Rukander

    Work is hard, printing money is very easy.

    • John

      Provide a link that shows the Fed is printing money, as you say.

      “For the past several years many have proclaimed that hyperinflation was right around the corner. After all, hadn’t the Fed been “printing money” at historic rates. On closer examination, however, the Treasury, not the Fed, which is in the printing business, has not exceeded the actual production of worn out bills since 1999. Credits have been created but actual greenbacks have not.”

  • DJohn1

    The “system” is based on laws produced by the U.S. Congress.
    The Judicial court system backs the laws produced by the U.S. Congress even when they make no sense whatsoever.
    Example: We have a kill the wealth plan in place. That plan is shameful in that it takes any reward a working person has for saving money as soon as one gets sick.
    First this plan makes the average person saving money give up anything that they have ever earned. Then, it pays for everything under Medicaid.
    It basically strips you naked of any wealth and then gives you your underclothes back. I think the limit is a 2,000 dollar car to get around in and I am not sure of the limited amount of money you get.
    Your house, your cars, everything else is taken from you by the Medical System in place right now even under Obamacare.
    The only way to save is illegal. You have to keep the money out of the banking system. Because the banking system is a stool pigeon for the government. The banking system is contemplating confiscating(stealing) any savings we have anyway.
    It is contemplating the idea of doing away with money so they can control everything.
    They will allow you burial expenses.
    Our government is funny. I have a sister-in-law with a mild case of dementia at 80. They are willing to pay 6,000 a month to keep her in a nursing home. They were willing to pay her 800 a month in social security to be independent under Section 8 housing.
    Literally millions of old people are in the same circumstances.
    Add it up.
    Obamacare is a bad joke on the working public.
    This same funny government sees logic in taking away over 50% of the discretionary income of the general public for health insurance.
    Then they have a little problem with all the retail stores going out of business for lack of people with cash to operate with. So the credit cards are maxed out. The people go bankrupt. So what?
    The government should be paying attention to a lot of things they are not. All of which compound.
    The government under corporate management has taken a lot of the jobs overseas to cheaper labor. Then they wonder when the tax base of income tax collapses. Funny people!
    They allow things like “Your Fired – Now Train Your Much Cheaper Foreign Replacement” and do not connect that with income taxes gone south.
    They are not funny anymore. They are simply not in touch with reality. That is generally recognized as insanity.

    • Carrie

      Yes it is a disgusting display that occurs to the elderly in our society. You work hard, save money are forced to go on Medicaid at a certain age and then they take any savings you have left. So once you go into the nursing home you are never coming out again, unless it is in a body bag. Why even bother to pay off your house, etc when it will all be taken from you. Better to save money in your mattress that they don’t know about. Damn our government and damn the medical industrial complex. They are agents of evil.

      • df NJ

        I don’t understand the math but I always think people have the most base motives. If enough people pay off their houses and interest rates will return to double digits. This would cause the price of a house to collapse by 50% or more. If this happens is there some kind of way the Federal Reserve bankers reap the drop in value of the house? My thinking it would not being in their interest to do so because it would prevent people from borrowing MORE money on the sale of a paid off house. But then again, if house prices drop 50% to 75% then people working at low wages will start borrowing more money to buy houses.

        Whatever happens, I’m sure the workers in this country will get screwed somehow.

  • JailBanksters

    Don’t know if addiction is the right word but, you can’t stop it, and you don’t have a choice to not be a part of it.
    The entire system is designed around paying off debts by creating more debt. It is a debt can never ever be serviced, it’s a perpetual debt that feeds on itself every time you use a Bank for anything.
    It’s Brilliant really. It’s the second biggest con after religion, which was created by those of a religious order. The third biggest con would be Climate Tax, also created by the same mob.

  • Alan

    Michael, one thing I would be curious about would be a chart showing weekly or monthly repos of cars purchased or leased and taken back by dealers. This would be a clear early indication of people having financial problems making monthly car payments. Is there anything like this out there in data land? Thanks, Alan

  • T.

    Yes they will and TMIM will be of No help at all.

  • tacoma

    Debt is not the only thing America is addicted to. Add to it:
    – Guns
    – Narcotics
    – Car
    – Violence for entertainment
    – TV, texting and tweeting
    – Food for obesity

    On a recent visit to China I came away with a clear view of what Chinese younger generation is addicted to:
    – Education

    • df NJ

      There are plenty of smart people in America. They just lack opportunity to do anything meaningful since all the manufacturing jobs have gone to China.

  • Alan

    Shame on you globalist, corrupt politicians and corrupt private citizens, why blame it on all the Americans when it isn’t their fault. People can’t choose anymore and whatever the people want is not reflected in Washington.

    Shame on the corrupt government and thieves that are causing all this.

  • CharlesH

    OK – so the government is way in over it’s head. What will be the catalyst – that ONE thing – that will bring all of this to a head…AND what will that effect actually be? Maybe I’m being pig-headed or just plain stupid, but I’m not seeing what the outcome of all of this will be. What will I see – feel??

    • Gold Stars

      Crushing debt, for you and all around you!
      Lack of capitol for any kind of improvement in all sectors of life.
      Business failing like water going over a fall.
      Jobs becoming even more scarce.
      Fewer and fewer people working, no place to work at.
      Need I go on?

  • df NJ

    “Yet there are still lingering problems that Yellen and other Fed officials are likely to cite as reasons for delaying a first rate hike a while longer. Though average hourly earnings rose 2.3 percent in May from a year ago, wage increases remain generally sluggish.”

    The lack of wage growth will destroy our economy. This is why I think Barry Sanders has a very good chance to become president. We may be experiencing a once in 80 years kind of moment. His populist rhetoric will play. The way you become a leader is find a parade and step in front of it. He may be a socialist but I think most Republicans are completely out of touch with the minimum wage voters and how angry people on the bottom rungs of our economic ladder are feeling right now.

  • Mondobeyondo

    We are the most debt addicted nation on the planet.

    And our debt is colossalhugegiganticenormous.

    “The bigger they are, the harder they fall”. Our fall is coming, and it will be beyond catastrophic. More like apocalyptic.

    • toadsticker

      The movie “Apocalypto” is our story.

  • VigilanteCaregiver

    I hear a lot on here about how bankers are evil, banks are owned by Jews, ready to enslave us all, etc. So… has anyone ever really called the banks and asked them about all this? I did. :)

    Banks are not owned exclusively by Jews, but owned by a lot of investors – like normal corporations. Those investors are from almost every background, nationality, creed, and faith. The most of the banks were not started by anyone of Jewish heritage, but mostly English and Scandinavian backgrounds. Are they ready to enslave us all? Most reps laughed at the question, but some of the larger banks’ reps said they have too many regulations on them that really prohibit that kind of dominance.

    Then I asked about the Federal Reserve. They all declined to talk about it. When I pressed as to why they wouldn’t – the consensus was that they really have no information to offer! The bigger banks use the federal reserve as a bank just like we use a bank as a consumer. The Fed Res, however, can ‘bully’ the bigger banks to make certain actions. Interesting.

    The results of asking them these questions, coupled with checking out their answers at the federal register and SEC means they’re most likely not the source of the problems.

    I wish they’d divulge more. Wonder what would happen if we got these banks on our side? Or, with the treatment they’ve been getting from the Federal government, are they already? They want to survive and thrive, just like any corporation. They collapse like in the Rollover (1980) movie, then what happens to ’em?

    Too many questions. Not enough time for answers.

    • Annoyingandlovingit

      YOU CHECKED IN WITH THE BANKSTERS!!!! HAAHAHAHAHAHHAA!

      Your summation is palpable, yet elementary. We all knew this as assumption.

      Find a better blog or forum, one that appreciates your mind. THis place is 4chan rejects and psychos.

  • BenguluruHuduga

    Corporations in debt, has mostly gone into buybacks . not much has come down into productive investment. the execs have got richer ; way lot richer.

  • Kevin B

    The US is a feminized joke that deserves to face what is coming.

  • DaveK913 .

    We were set on the path of being a debt based economy after Nixon nailed the gold window shut. I remember an episode of The Flintstones where Fred and Barney admonished Wilma and Betty for abusing credit cards.

    I remember when you actually had to qualify for a credit card. Not everyone could but that stopped being the case over thirty years ago. I remember when the Discover card first appeared on the scene with their “cash back” policy and thought “That’s weird, it’s like they’re encouraging people to spend.

    I remember when home loans required actual qualifications. That went out the window decades ago.

    I remember when the markets wearily plodded along, flirting with the 1,000 mark, sometimes breaking it before falling back below. After, I remember how little time it took to breach 2,000. Then 3,000. Then 4,000. They’ve been on steroids ever since. Market fundamentals? Pfft.

    I remember the first time I heard of a teenager with no job or income having their own credit card.

    I remember the irrational exuberance of the late 90s when tech IPOs were all the rage but I couldn’t understand how these low dollar operations could be valued so highly.

    I remember watching the house flipping shows in the midst of the housing bubble when the people would talk about ARMs or funky mortgage terms.

    It’s all because we live in a debt and speculation based economy. We went down that path because Nixon turned the US dollar into a full blown fiat currency and every other country in the world followed suit.

    Almost the entire economy is dependent on Americans borrowing and spending beyond their means using “money” that they will never touch. It’s why you hear politicians pushing home ownership programs. Garbage like Cash 4 Clunkers, trying to coerce people into borrowing to keep things rolling so they can pretend everything is fine. Interest rates are kept low to encourage borrowing because it’s the last round they have in the chamber.

    It’s all a mirage, folks. Credit(Debt, same thing) is the driver of the economy. Almost 75% of GDP is service based. What happens when it’s 90-95%? What happens when a country that already consumes more than it produces becomes a full consumption society?

    I could go on and on but I’m sleepy. Have a good one, folks.

  • Kevin B

    Americans will never learn. Sorry, but we are beyond help at this point.

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