Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

American Consumers Now Over $3.9 Trillion in Debt

  by    0   0

Americans continue to pile up debt, adding to numbers that were already at record levels.

US consumer debt increased by $20.1 billion in August, pushing total consumer credit to a record $3.94 trillion, according to the latest numbers from the Federal Reserve. That comes to a 6.2% annual growth rate.

These figures include credit card debt, student loans and auto loans, but do not factor in mortgage debt.

Americans are still burning up those credit cards. Revolving credit balances swelled by another $4.8 billion in August after a $1.4 billion increase in July. Americans’ credit card balances are growing by an annual rate of 5.6% and currently stand at just over $1 trillion.

Non-revolving credit, which includes auto loans and student loans, grew by $15.3 billion (6.4%) in August after a $15.2 billion increase in July. Americans have piled up nearly $2.9 trillion in non-revolving debt.

The mainstream spins increasing American indebtedness with a decidedly positive tone. Bloomberg proclaimed, “Steady hiring and tax cuts have helped households improve their finances, though wage growth has remained moderate throughout the economic expansion.” According to MarketWatch, “Fed Chairman Jerome Powell said late last month that household balance sheets are in good shape,” and, “Economists expect consumer spending to add to economic growth in the third quarter.”

When you cut through all the hyperbole, the real story is the American economy is built on debt. Yes, Americans are still buying stuff. But they are putting it on plastic. At some point, they will have to pay the piper. And no matter what Jerome Powell says, this is not good news in an environment of rapidly rising interest rates.

Peter Schiff dug down to the crux of the matter in a recent podcast. He noted that wages are not growing as fast as other prices. Wages aren’t even keeping pace with the Consumer Price Index, which likely understates the true rate of price growth. Americans aren’t borrowing billions of dollars because they are in great financial shape.

Clearly, their jobs are not adequate to cover the cost of living. That’s why they’re having to borrow so much money to make ends meet. And of course, the cost of borrowing that money is going up and it’s going to continue to rise.”

And of course, the cost of borrowing is also going up for the federal government. As we reported last week, the feds are in a massive debt spiral of their own. Corporate debt also stands at record levels. As Peter put it, the economy is a bubble and the air filling that bubble is cheap money.

The bottom line is Americans are too broke to afford those higher rates. It’s everybody. It’s individual households, it’s corporations, it’s the government. And not just the federal government, but local governments and state governments. Everybody loaded up on debt when interest rates were low. People say, ‘I’ll take advantage of this. You’re a fool if you don’t go out and borrow money. Look how cheap it is.’ … So, we’ve built this so-called strong economy on a foundation of cheap money. So, if the economy is strong because interest rates are super low, and if interest rates go up, well now the economy can no longer be strong because that shaky foundation you built the economy on collapses and the whole house of cards comes tumbling down with it.”

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

 


Related Posts

Gold Flows into ETFs for Second Straight Month; Global Holdings Up on the Year

Gold holdings in gold-backed ETFs rose for the second straight month and turned positive for the year in November. According to a report by the World Gold Council, 21.2 tons of gold, valued at about $804 million, flowed into ETFs last month. Total global holding rose to 2,365 tons.  Related

READ MORE →

Demand for Physical Gold Expected to Be Strong Moving into 2019

World Gold Council chief market strategist John Reade projects healthy demand for physical gold in 2019 and said any kind of economic slowdown could boost demand — and the price — significantly. Related

READ MORE →

Peter Schiff: Nobody Wants to Deal With the Truth

The stock market got a nice bump on Monday with the news that there was a “truce” in the trade war. That lasted all of one day. The markets tanked on Tuesday as investors realized the “truce” really didn’t mean anything. The Dow Jones plunged 799 points, a 3.1% drop. The S&P 500 declined 3.2%, […]

READ MORE →

The Everything Bubble Is Going to Pop

We talk a lot about bubbles in the economy. Over the last few weeks, we’ve discussed the stock market bubble, the housing bubble, the auto bubble and the debt bubble. Nick Giambruno simplifies things in an article he recently wrote for the International Man. He just calls it the “everything bubble.” And he says it will […]

READ MORE →

Updated Report: The Powerful Case for Silver

According to the US Mint, demand for American Eagle Silver Coins surged last month. The mint sold 1.65 million ounces of silver in November. That represented a 15% increase over October sales and a whopping 327% increase over November 2017. Perhaps investors are recognizing the tremendous upside potential for silver. After all, the silver-gold ratio […]

READ MORE →

Comments are closed.

Call Now