Personal Finance: More Debts and Higher Debts

February 15, 2024, 10:33 am EST

More Debts and Higher Debts

Both the US government and US households or individuals are spending like crazy overall in the past 5-10 years. The charts of US Federal Debt and US Household Debt show that debts level kept making record highs of 33 trillions and 18 trillions, respectively. 

Since the stock markets reached record highs for the past few months, it could make people less worried about the debts and continued spending and borrowing. However, we would like to point out that the end result could be catastrophic when reaching the boiling point. 

First of all, there is a price to be paid during the process. Interests need to be paid with the higher amount along the way. If a person has credit card debt but only pays the minimum amount, the accumulated debt or pain would come one day until bankruptcy. 

More importantly, high debt t is like a person with high blood pressure who carries a high risk of heart attack or stroke. It is never a healthy sign with mountain high debts or blood pressure. 

Therefore, we suggest people reduce the debts by controlling spending and paying off debts as soon as possible. Debts-free is a formula for a happy and less stressful life. 

On the government level, we, as individuals, cannot do much about it since the budgets and spending are decided by congressmen. Currently, the US spends a big portion on wars (Russia-Ukraine, Hamas-Israel, MiddleEast regions) and never–ending refugees. It does not seem these issues would be resolved soon. When inflation comes back again, the higher interest would likely to terminate the bulls, in our opinion.

Our viewpoint for the US macro economy is pessimistic in this regard. 

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