Consumer debt, corporate debt, and government debt are all going up. But that’s not all. Margin debt – debt that investors borrow against their portfolio to buy more stocks – has hit a record of $642.8 billion. What in the world are people thinking?
Clearly, they’re not thinking. Because thinking takes work. Most people don’t like to work. They like to pretend to work.
Similarly, people may say they care about debt. But, based on their actions, they really don’t. When it comes to the national debt, the overarching philosophy is that it doesn’t matter.
Government debt certainly doesn’t matter to Congress. Nor does it matter to the President. In fact, their actions demonstrate they want more of it.
Big corporations with big government contracts want more government debt too. Their businesses demand it. They’ve staked their success on the expectation that the debt slop will continue flowing down the trough where they consume it like rapacious pigs.
The higher education bubble is also based on a faulty foundation of debt. The business model generally requires signing credulous 18-year-olds up for massive amounts of government-backed student loans. From what we gather, federal student loan debt is closing in on $1.4 trillion.
Now what would happen to all these high paid professors and fancy country club style college campuses without all this government-sponsored debt?
The automobile business is also based on a model that demands more debt. Outstanding auto loan debt is now somewhere around $1.2 trillion.
Fundamental Divergence
You see, this is how the world works circa 2018. After decades of expanding consumer, corporate, and government debt, the entire economy has been retooled and restructured to be entirely dependent on it. What’s more, Federal Reserve policies have promoted it.
The fact is we’re on a collision course with disaster. Take government debt, for instance. Over the last decade, nominal gross domestic product (GDP) has increased from about $14.7 trillion to about $19.3 trillion. Over this same period, the national debt’s increased twice as fast; it has doubled from $10 trillion to $20 trillion.
