Now I am the first to talk about the massive debt, accrued via credit with respect to our US Government, both at the federal and State level. In fact, as of 2008, our total GDP was near or around 13 trillion, however our combined credit market debt was about 53 trillion. This is foul, but even worse are the habits that we regular old citizens practice.
It seems that we are no longer citizens, but rather consumers. Looking at credit cards alone, on average we owe about $971 billion. This is about, $3,100 of credit card debt per person, or $8,299 per household. This doesn’t even include non-revolving debt, like loans for auto, and other things. Our non-revolving debt is estimated to be $1.617 trillion, or about $5,200 per person ($13,800 per household).
To put it simply, we spend more than we save and in fact, our savings nationally have declined and at a negative level (about 2.0%) for the first time in our modern era of government. This means that if as a country we have negative savings, that we supplement what we don’t have from the surplus savings other nations have abroad, for other countries save more than we do in general. This is a result of several factors, namely folks living beyond their means. Just as our government borrows to hold lavish wars and purchase debt from big Wall Street banks, so do we the American people.
I can say the debt that we have amassed collectively has seemed to increase at a staggering rate since we came off the gold standard in the 1970s and again because of poor behaviors practiced across all segments of our economy. From credit cards, to the collateralization of debt, complex swaps and derivatives and other toxic papers.
At this point in time, at the corporate level alone, we have the most corporate-debt defaults, by dollar amount, in history. Some have even speculated that companies are poised to default on more than $500 billion of corporate bonds/bank loans over the next few year’s years. And why? Well I know no one asked me but it is simple due to people at all levels as stated earlier not being economically responsible. In 1991 we saved on average 7.3% of our income per household. As of 2007, this had declined to about 0.6%. We cannot continue this behavior for it means we will be living off of the surplus saving of other nations the likes of