Credit Card Debt Reaches All-Time highs

The average American consumer spends 43% more than he or she earns and the national credit card debt is $2 trillion. Is there no end in sight to this madness of credit?

In a nation that has the highest amount of national debt in the history of the world, so to do its people have the highest credit card debt. The United States of America holds a $11.5 trillion national debt and not to mention the other trillions of dollars owed to nations around the globe. Credit card debt has risen to all-time highs. The average household credit card debt is $8,000. That statistic is not surprising considering that Americans spend on average 43% more than they annually earn. As of October 2003, the grand total national credit card debt was just under $2 trillion. Although, the latest statistics of national credit card debt have not been published, it is definitive to assume that it has been drastically raised. Everywhere western consumers are being force-fed all these ‘things’ that will make us happy and that having it now is far more important than worrying about your savings in ten years. Playing devil’s advocate for a moment, one cannot blame a consumer for spending money. When interest rates give you one nickel on your savings account each month and your money is being debased and devalued every year, it is easy to just cave in and realize that your money is worth less and less so you might as well spend it. Of course, in a recession, which is actually a good thing because it weaves out the malinvestment and paves way for the competent companies to take over, people are supposed to save money, pay down the debt and rebuild the savings. However, the government does the exact opposite. In Keynesian theory, government is supposed to spend for the people when they do not. This is a terribly flawed system. It does not take a rocket scientist to figure out when the the people are in enormous amount of debt, a government does not take on that debt with more debt and more inflation. Consumer spending counts for 1/3 of the U.S. economy. It is nice to buy a nice new sweater or that electronic gizmo however, when one cannot afford it, it is the reasonable notion to realize that you should not buy it. Since the 1990s, credit card debt has risen just under 170% with no end in sight. The process of cheap and easy money created by the central banks around the world will exacerbate the problem. In Pres. Obama’s economic state of the union speech, he correlated words of the flow of credit and how important it is to expand credit to everyone. Credit is not money. A phony economy is not real wealth. Producing units and saving your money is real wealth. In Goethe’s Faust, the main character, Faust, asks Mephistopheles for all the riches in the world but in exchange he must give his soul to the devil, Mephistopheles. This is exactly what is happening today in the western world, we spend into oblivion the entire vast amount of riches but at the end of the day we are giving up our economic freedom and our lives.