An Economy Built on Credit

That’s a statement that’s never been truer in the world than today, and it’s the American economy we’re talking about. New car shopping today, and we saw nice, but not extravagant luxury vehicles in the $60,000 range. Monthly leases of $785 with "aggressive" incentive packages. Ridiculous, the price increases year to year, but it demonstrates what’s truly going on in our economy – a terribly weak American dollar that the U.S. government is trying desperately to hide.

From the Des Moines Register – Debt-Laden Middle Class Words Harder, Slips Further.

It’s pretty clear that borrowing has replaced earning as the mechanism for supporting a middle-class life. Families may still live in big houses, drive hulking SUVs and dress in snazzy clothes, but they’re living on borrowed time and money. Consumer debt as a percentage of household income has risen greatly. Average credit-card debt rose from $4,000 to $9,000 from 1990 to 2004. Real average earnings declined almost non-stop from 1970 to 1990, and when adjusted for inflation, have recovered only slightly since.

The administration is doing a fantastic job of keeping a credit-loving people ignorant of the true nature of what’s happening. They’re clearly printing money as fast as possible, hoping it won’t be noticed. But is IS being noticed. The prices of precious metals are rising, foreign governments like China are getting out of holding U.S. dollars, and prices of everything (like cars – especially foreign cars) are skyrocketing. This summer looks to be an expensive one with regard to gas prices. How long before people simply can’t afford to drive to work any more, or worse, can’t afford to keep buying consumer luxury items like flat screen TVs, cable service and DVD players?

I think we’ll soon find out.

Posted in Economy