Wednesday, August 3, 2022
New York (CNN)Americans are piling up credit card debt as they struggle to keep up with the high cost of living.US household debt surpassed $16 trillion for the first time ever during the second quarter, the New York Federal Reserve said Tuesday.Even as borrowing costs surge, the NY Fed said credit card balances increased by $46 billion last quarter.Over the past year, credit card debt has jumped by $100 billion, or 13%, the biggest percentage increase in more than 20 years. Credit cards typically charge high interest rates when balances aren't fully paid off, making this an expensive form of debt.The NY Fed said the credit card binge at least partly reflects inflation as prices rise at the fastest pace in more than four decades.
Sorry to be such a Debbie Downer all the time . . . but this increase in credit card debt is really bad. CC rates are adjustable, and boy do they ever keep up with and exceed inflation. If inflation doesn't slow down soon, plenty of people will have to default, and then end up with nothing to do except start liquidating their assets and cutting way back on their consumption. Including things like rent and food. That will according to Keynesian theory tip us into a full blown depression. This is toying with stuff like civil unrest. Caps on CC interest rates would only be a temporary solution. The only way out might be CBDC's and lots of "stimulus" via digital food stamps and rent vouchers. Ugly stuff. We'll have to turn to Herr Doktor Professor Krugman for his wisdom.