Gettin’ Better

Here’s one of the reasons why some of the economic reports say things are getting better: Americans are borrowing more money.  From student loans to credit card debt, Americans are going in to hock just to keep their heads above water.

In fact, as of December 31, the total amount of non-dischargeable (for now) student loans hit a new all time high of $1.08 trillion an increase of $53 billion in the quarter. By comparison, total credit card debt as of the same period was “only” $683 billion. At this rate, total student loans will be double the size of all credit card debt within 2-3 years.

What’s worse, while the 90+ day student debt delinquency rate did post a tiny decline from 11.8% to 11.5% in Q4, on a total notional basis due to the increase in outstanding balances, as of this moment the amount of heavily delinquent student loans has just hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter.


A new survey from finds that 28 percent of Americans say they owe more in credit card debt than they have in their emergency funds or savings accounts. That’s up from 24 percent last year, although the survey has a 3.5 percent margin of error.

About 51 percent said they have more in their emergency savings funds than they owe in credit card debt, the lowest percentage since started tracking this data in 2011.

Student Car Loans as % of Total 2013Chart from

These are not signs of an improving or healthy economy.  As Herbert Hoover and Ronald Reagan said, you can’t spend your way to prosperity.

“You can’t spend your way to prosperity’ (or, “You can’t borrow your way to prosperity”) means that the federal government can’t achieve prosperity by accumulating a large deficit to spend lots of public dollars, or by printing money and spending it. The proponents of this phrase often argue to cut federal spending, or to cut taxes and excessive regulations to encourage private business.

The saying was popular in the 1930s, during the Great Depression.  Former President Herbert Hoover said in 1936: “”One time I told a Democratic congress that you cannot spend your way to prosperity.” Presidential candidate Ronald Reagan said in 1976: “You cannot spend your way to prosperity. You cannot build prosperity by going into debt.”

That saying also applies to individual behavior as well.

This is getting too depressing.  I find that when I am depressed, good music helps cheer me up.  So now, Ladies and Gentlemen, a music video from one of the more underrated bands of the 1980s:


Categories: Bad News Everyone!, Borrowing, Debt, Depression

Tags: , , ,

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