Economists are stating that the next economic crisis will be fueled by Americans’ obsession with and overburdening of themselves with debt. While a staggering number of Americans live paycheck to paycheck with little savings, they also owe massive amounts of money that many will never be able to pay back.
The only saving grace for many American households is that artificially low interest rates have reduced the average debt service levels, according to a report by Seeking Alpha. Americans have been tapped out for a while now, and with many increasing their debt load as opposed to reducing it, a debt crisis could be on the horizon.
While the American consumer won’t be solely to blame when the entire economy comes crashing down, many are doing their part to make it overly difficult when it does. The next collapse will be much worse than the Great Recession of a decade ago, as it will be caused by a combination of household and corporate debt combined with underfunded pensions, according to Real Investment Advice.
Americans have come to believe that they are entitled to “the American dream” and many go deeply into debt to accomplish their version of that utopian ideal. The idea of “maintaining a certain standard of living“ has become a foundation in our society today.
Americans, in general, have come to believe they are “entitled“ to a certain type of house, car, and general lifestyle which includes NOT just the basic necessities of living such as food, running water, and electricity, but also the latest mobile phone, computer, and high-speed internet connection –Seeking Alpha
This entitlement is there whether the income to provide it is there or not. American consumers are not funding their lifestyles with their income, rather with debt. Americans hola a record amount of debt, which totals roughly $1 trillion more than it did in 2008. While Americans are piling on debt, the cost of living has gone up while the purchasing power of the dollar is continuing downward thanks to money printing schemes and the national debt.
“In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.” –Pew Research
The data shows that debt is a huge problem in this economy, which is already a debt-based economy and built to fail. The other point far too many don’t want to admit is that Americans would have a lot more money to fuel the economy if the government stopped stealing a substantial amount of their income before they are even paid.
The next “crisis,” will be the “great reset” which will also make it the “last crisis.”