The long debt emergency has arrived â€“ From 1950 to 1980 total US credit market debt to GDP held a ratio of 1.5. Today that figure is above 3.5 with total US credit market debt at $54 trillion.
We are reaching a point of no return with global debt. The US will be running deficits for as far as the indebted eye can see. This isnâ€™t a new or novel trend but the magnitude certainly is. Since we stepped on the deficits do not matter accelerator in the 1980s the US dollar has been losing its purchasing power year after year. This might not be a big deal for you if you have a large share of international currencies and major investments overseas but the results for the working and middle class are financially disastrous. Most American workers are paid with US dollars and not with foreign currencies. The troubling aspect of our economy is that we are starting to move backwards and for younger Americans and their parents, it is hard to imagine a world where the subsequent generation will be in worse shape but that is the plate we are being served. We need to look at some data very carefully to see how incredibly indebted we are as a nation.