KOMMONSENTSJANE

11/25/2023

The writer of this article is trying to ease the pain with his words – that 33 trillion doesn’t matter. Yes, it does. It shows that the people who we have elected don’t know or care how debt affects our wallets. Also, it is a reflection on them by their spending habit is not setting a good example; and the banks are allowing voters to over load their cards. Why?

Credit Card Debt in America

Credit cards are an easy scapegoat when overspending occurs and might actually be the right source to blame. As of June 2022, the average American holds about $5,221 in credit card debt.⁵

According to Nature.com’s “Neural Mechanisms of Credit Card Spending” report, studies show that shoppers with credit cards are willing to spend more on items, check out with bigger baskets, focus on and remember more product benefits rather than costs, and make more indulgent and unplanned purchase choices. The ease of swiping the card with no immediate repercussions is leading to more credit card debt among Americans.

Final Thoughts

Whether you want to believe it or not, credit cards have made it easier and quicker for Americans and people all over the world to spend money. As credit card usage increases and digital wallets become more widely available, we could see the amount of money spent during a credit card transaction vs. cash increase even more than now.

It’s always a good idea to keep an eye on your credit card bills, don’t spend money you can’t pay off, and pay off your balance monthly to avoid hefty interest charges. We also have more tips on dealing with credit spending and debt.

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Moneywise
America’s national debt is well over $33 trillion — but here’s why the country won’t pay it down

At $33 trillion and counting — actually, it’s presently above $33.75 trillion — America’s national debt is astonishingly high.

But government deficits don’t exactly work like household debt, as New York Times columnist and Nobel Prize-winning economist Paul Krugman contends in his May 13 offering. The big, bad number isn’t as scary as it seems.

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“Governments aren’t like people,” he wrote. “[They] must service their debts — pay interest and repay principal when bonds come due — but they don’t necessarily have to pay them off; they can issue new bonds to pay principal on old bonds, and even borrow to pay interest as long as overall debt doesn’t rise too much faster than revenue.”

Krugman breaks down and defends his thesis in convincing fashion, though it’s easy to see why so many Americans are spooked by today’s debt figure and politicians try to make a political football of it.

Related video: 6 Reasonable Debts to Live With (Money Talks News)

In fact, you’d have to go back to 1837 to find the last time the United States was debt-free. Texas was still an independent republic and only 26 states existed.

So how big is the debt, really?

One trillion, let alone 33, is a number many folks can’t quite wrap their heads around. It is “a million times a million” — though “trillion” sounds so close to “billion” that it’s easy to lose track of just how behemoth a sum it is.

Here are a few ways to put the current level of U.S. debt, over $33 trillion, in perspective:

It’s 22% higher than the U.S. gross national product as of June 30 (about $27 trillion).
It’s six times the U.S. debt figure in 2000 ($5.6 trillion).
Paid back interest-free at the rate of $1 million an hour, $33 trillion would take more than 3,750 years.

Voters and elected officials understandably get bent out of shape when they assume that running up so much debt is due to reckless and runaway spending.

We’ve all been told to spend less than you make, avoid high-interest credit card debt and delay material gratification on big-ticket items until you’ve worked out the numbers first.

All of that’s true and smart. Excessive personal debt will force you to spend a lifetime playing catch-up, or to declare bankruptcy, which leaves a black mark on your credit score for between seven and 10 years.

But debt-wise, comparing the federal government to a family of four doesn’t work. That’s because the principles of personal finance don’t apply to how governments spend. So unless you or someone you know plans to dress as Uncle Sam in the next local Fourth of July parade, dismiss the notion that governments are people. They play by entirely different pocketbook rules, which Krugman makes clear as crystal.

Debt grows, but revenues do, too

Need a pat explanation for why the government need not pay off its debt, even though you must? Here it is, in blunt Krugman style: “You are going to get old and eventually die. The government isn’t.”

In other words, the capacity of the United States or any sovereign nation to manage its debt boils down to one question: can it still produce revenue to meet its obligations? That’s where his notion of “servicing” debt as opposed to paying it off in full comes into play.

To be sure, Krugman notes by way of Rudyard Kipling in his poem “Recessional,” that all nations will be “one with Nineveh and Tyre” and cease to exist. But excluding such a tragic event — in which case debt would be irrelevant anyway — governments “normally see their revenues rise, generation after generation, as the economies they regulate and tax grow,” Krugman wrote.