Have you heard that we are "paying down our debt" and that consumers are spending less? Not so. Consumer debt at the end of 2008 was 13.8 trillion and now sits at 13.5 trillion. This is supposed to be evidence that Americans are taking in their belts, paying off credit cards, living more responsibly, right?
Just a minute, please. This ignores entirely the activity of banks, who have actually be responsible for FORGIVING (or at least writing off) much of that debt. In fact, it is actually worse than that. When you look at the real numbers, we have not stopped spending at all. Rather, we have taken on MORE debt.
Banks have written off approximately 500 billion of consumer debt since 2008.
If consumer debt was $13.8 trillion at the end of 2008 and the banks have since written off $800 billion, total write-offs were 5.66% of that debt. If total consumer debt now sits at $13.5 trillion, then consumers have actually taken on $500 billion of additional debt since the end of 2008. The consumer hasn't cut back at all. They are still spending and borrowing. It is beyond my comprehension that no one on CNBC or in the other mainstream media can do simple math to figure out that the deleveraging story is just a Big Lie.
Perhaps this is a deliberate and calculated lie. We are, after all, a CONSUMER economy. Consumption and spending is what makes the wheels go round. The gang of idiots at the top truly believe that if we can be convinced to go deeper into debt and spend more, the economy will recover. I ain't buying it, anyway.
The Great Deleveraging Lie by Jim Quinn