In a recent study it showed that the average American is only weeks away from filing bankruptcy. If you watch the television it’s pretty hard to believe this being true unless you do some research on your own. After digging deep into websites regarding facts and figures on the economy, it appears that this fact is closer to the truth than most would like to believe. Most Americans watch one of the morning news shows that are very light and run by the corporate media. The information that is broadcast is very generic and really could go either way depending on who was reporting on it. One thing that everyone doesn’t argue about is the amount of debt that the US has now accumulated. The last time I checked the national debt was close to $16.4 trillion and growing. At the end of 2012, it was reported that the bankruptcy filing numbers have declined drastically meaning that the economy was in full recovery. From my perspective, just because something happens it takes a huge leap of faith to get to a recovery without looking at all the other numbers. After much research I came to the conclusion that we are living in a credit card economy. As long as Americans continue to have the ability to keep borrowing more money they won’t file for bankruptcy.
To get an answer to the outcome you need to look at the why and how. Looking at the why, we can go back to 2010 when we saw a record number of Americans filing for bankruptcy to eliminate their debt. Coincidentally, right around that time the Fed introduced quantitative easing through QE1. Shortly after the introduction of a QE1 the stock market started rallying and small amounts of money started filtering into the economy. One year later, QE2 was introduced after a full year of printing money and pushing it out to the banks. Banks now having more liquidity started lending money again. Back in 2008, the banks removed all available balances on credit accounts and lines of credit to protect themselves from the massive liability outstanding. At this time, the money started flowing again and credit was once again given to just about anyone asking for it. Something else interesting happened, the number of Americans filing bankruptcy also declined. While all this was going on unemployment wasn’t dropping making it very apparent that the quantitative easing was the only thing driving the economy. The same thing happened in 2012 and the Fed added QE3 and QE4. Looking at all this information we can come to the conclusion that we are living in the greatest debt bubble in the history of the world and at some point in time it will be game over.
Americans now believe the lie of living on Fantasy Island using their credit cards. Back in 2008, the average American had a consumer debt to income ratio of right around 50%. That number now is at 154%. This leads me to the conclusion that the economy is not getting better, the banks are just enabling overly indebted Americans to continue on living like a rock star. I guess we shouldn’t expect more out of the average Joe when the government can’t even balance their own checkbook. Before the Federal Reserve was created, the US had very little debt. Now, the debt is 5000 times larger than when it began. People are now borrowing themselves into oblivion when they should be talking to a bankruptcy attorney about filing bankruptcy. This will only go on for so long as this kind of lifestyle is completely unsustainable.