What Is Americas Biggest Economic Problem?
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There are a lot of issues to be dealt with in order to get out the economic mess were in, but the first and foremost one is the the issue we all can deal with. Every last of the 300 Million Americans. All of us. What is the biggest economic problem that the United States is facing? Very simply, our biggest problem is that we have way too much debt. Over the past 30 years, household debt, corporate debt and government debt have all grown much faster than our GDP has. But no nation on earth has ever been able to expand debt much faster than national output indefinitely. All debt bubbles eventually burst. Right now, we are living in the greatest debt bubble in the history of the world. All of this debt has fueled a “false prosperity” which has enabled many Americans to live like kings and queens. But no nation (or household) can pile on more debt forever. At some point the weight of the debt becomes just too great. It is amazing that the United States has been able to pile up as much debt as it has. Over the years, many authors have predicted that U.S. government finances would collapse long before the U.S. national debt ever got to this level. So the mountain of debt that we have accumulated is quite an “achievement” if you want to look at it that way. But the clock is ticking on this debt bubble and when it collapses we will say “bye bye” to our vastly inflated standard of living and we will discover that we have destroyed the economy for all future generations of Americans. Household Debt Sometimes a picture is worth a thousand words. When most Americans think of the “debt problem” in this country, they think of the debt of the federal government. But that is not the only debt bubble that we are facing. Thirty years ago, household debt in the United States was approaching the 2 trillion dollar mark. Today, it is sitting at about 13 trillion dollars…. We have been trained to pay for everything with debt. We pay for our homes with debt, and mortgage debt as a percentage of GDP has more than tripled since 1955. We pay for our cars with debt, and at this point about 70 percent of all auto purchases in the United States involve an auto loan. We pay for higher education with debt, and the total amount of student loan debt in America recently surpassed the one trillion dollar mark . Wherever we go we pay with plastic. If you want a heated cat bed and a cute little cat sweater for your little kitty just put it on your Visa or Mastercard. Amazingly, consumer debt in America has risen by a whopping 1700% since 1971, and if you can believe it, 46% of all Americans carry a credit card balance from month to month. We are absolutely addicted to debt and we do not know how to stop. State And Local Government Debt Our state and local governments are also addicted to debt. 30 years ago, state and local government debt was approaching the 400 million dollar mark. Today, state and local government debt is hovering around the 3 trillion dollar mark…. In the United States today, we don’t just have one “government debt problem” – the truth is that we have hundreds of them. All over the country, state and local governments are facing bankruptcy because of too much debt. For example, according to Fox News the city of Stockton, California is right on the verge of declaring bankruptcy. In fact, an announcement could come as early as this week…. Stockton, Calif., is set to declare bankruptcy as early as this week, according to local officials, a move that would make it one of the largest U.S. cities ever to file for reorganization. On Monday, a state-required mediation with creditors to find a fiscal solution is scheduled to expire. Stockton’s City Council is then slated to meet Tuesday to decide whether to adopt a budget for operating in bankruptcy, a move widely considered the last step before the city formally submits a Chapter 9 petition to federal bankruptcy court. Federal Government Debt Of course the biggest offender of all is the federal government . 30 years ago, Ronald Reagan was running around proclaiming what a nightmare it was that the U.S. national debt was reaching the one trillion dollar mark. Well, now we are about to blast through the 16 trillion dollar mark with no end in sight…. Running up debt at a much faster rate than our GDP is rising is a recipe for national financial suicide. Our politicians continue to steal about 150 million dollars an hour from future generations and everybody just acts like this is perfectly normal. We are going down the same path that Greece , Portugal, Italy, Ireland and Spain have gone. In fact, we already have more government debt per capita than all of those nations do. Both political parties have been doing this to us , and it just keeps getting worse and worse. Incredibly, the national debt has grown more under Obama in less than 4 years than it did under George W. Bush during his entire 8 year term . Since Barack Obama entered the White House, we have accumulated more than five trillion dollars of additional debt. We are on the road to national financial oblivion, and most Americans don’t seem to care. Debt From Sea To Shining Sea Now let’s add up all the debt in the country. When you total up all household debt, business debt and government debt, it comes to more than 300% of our GDP…. In fact, if current trends continue we will hit 400% of GDP before too long. As you can see from the chart, there was a little “hiccup” during the last recession, but now the debt bubble is growing again. So how high can it go before the entire system collapses? Total credit market debt owed is roughly 10 times larger than it was about 30 years ago. How in the world did we accumulate 10 times more debt in just
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