Sunday , 19 November 2017


Addiction to Borrowing Causing Another Bubble – Take a Look

We are trying to get out of a debt led crisis with more debt. The facts show this and we have compiled some of the more troubling data by putting the entire debt market into perspective here [and it clearly shows that] we flat out have an addiction to borrowing. [Read on!] Words: 600

So say excerpts from an article* at www.mybudget360.com which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited below for length and clarity. (This paragraph must be included in any article re-posting to avoid copyright infringement.)

The article goes on to say, in part:

The total market of debt shows our addiction to borrowed money. It is now up to an astonishing $53 trillion and continues to grow. Take a look at this frightening data:

total credit market debt

In 2001 total credit market debt was up to $28 trillion. Today it is now well above $53 trillion and inching closer to slapping on another trillion dollars this year. If you look at Greece as a microcosm of the bigger issue, you realize they are treating a solvency issue as if it were a liquidity issue. Let us be absolutely clear that all of this debt will never be paid off. This warrants repeating: The $53 trillion in total credit market debt will never be fully repaid [and, in spite of that,] it continues to grow

Do people really think we,[the U.S.] are going to pay off our $15 trillion national debt when our deficits look like this:

federal surplus deficits

We’ve been running continuous budget deficits since the late 1970s. We had a brief respite when it came to having a surplus with the tech boom but that was blown out the window completely with the real estate mania. Contrary to what most will say, deficits do matter and massive deficits really matter.

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Let us be abundantly clear that the total market debt is incredible. You now start having this challenging race where you are trying to avoid having your total debt surpass your annual GDP. The US has passed that mark and so have many other countries. The results in the long-run are never positive especially when people wise up and start asking for their money back. Since most don’t have the funds, they pay for it via inflation and a devaluation of their currencies…

Higher Education (Student Loan) Debt

The access to easy debt creates massive amounts of bubbles. We saw this in housing and now we are seeing it here in the U.S. with the giant higher education bubble. [Take a look at the chart below which shows just how serious the situation is.]

student debt sallie mae

Keep in mind this is only a tiny part of the student debt market. This year we will surpass $1 trillion point for student loan debt. I believe this will be another crisis that will hit and many indebted students are already feeling this. Many are being sucked into paper mill for-profits that are essentially scam factories that raid the government backed student loan funds. They lobby Congress to make it easier for them to report horrific placement data and change the metric on default reporting so it doesn’t look as atrocious. Even with these softballs from our bought out politicians, the data is still horrible.

Conclusion

A debt bubble cannot be solved with more debt…The financial media missed the tech bubble bust and the housing bubble bust so gear up because they will miss the next debt bubble bust as well.

*http://www.mybudget360.com/day-of-reckoning-for-global-total-debt-total-credit-market-debt-consumer-debt-large-charge-of-household-debt-trillions/

Editor’s Note: The above article has been has edited ([ ]), abridged (…) and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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