Category Middle Class getting in to serious Debt problems

May 16 2024

American Households Hold Record Debt Q1 2024


Posted Originally on May 16, 2024 By Martin Armstrong 

Debt Burden

The New York Federal Reserve reported that American households set a new record after plummeting into $17.69 trillion of debt, a 1.1% ($184 billion) increase from Q4 2023. Worse, the number of delinquencies is rising as households struggle to make ends meet amid the cost of living crisis. Inflation is not waning, taxes are rising, and America’s debt burden has become utterly unmanageable.

Mortgage balances rose by $190 billion and reached $12.44 trillion by March. People are paying far more in interest alone than they have in recent years. Those who bought in the hopes of refinancing are not in a good position. Auto loan debt rose by $9 billion, reaching $1.62 trillion.

Americans have been attempting to pay off their credit card balances, with overall credit card debt declining by $14 billion to $1.12 trillion. Yet, that was close to a record-high for credit card debt and we tend to see balances lowered after the holiday retail spending spree ends. Consumers do not want to pay those 20%+ interest rates on cards but many are forced to do so simply to put food on the table.

InflationWarAidMeme

Delinquencies are rising – this is a major issue. It is difficult to crawl out of debt once someone is deep within the cycle. “In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups,” said Joelle Scally, regional economic principal within the Household and Public Policy Research Division at the New York Fed. “An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households.”

Credit card delinquencies have reached their highest levels since 2012 when America was recovering from the Great Recession. In fact, by the end of Q1 2024, around 3.2% of all outstanding debt was in delinquency. The New York Fed reported a rise in missed payments across all debts, including those 90 days past due.

No foreign nation is coming to offer America a bailout check. The Biden Administration has made it clear that American households are NOT Washington’s priority. We are to continue working and paying taxes in order to fund foreign wars and climate change packages. How else will we house those 7+ million illegal migrants and offer them free healthcare and shelter? How else will we pay off the student loans for millions? How else will we continue to grow the public sector and pay for countless new social programs? Americans are in serious debt, and Washington is all but ensuring this trend continues.

Apr 29 2024

Beware of 2025


Posted originally on Apr 29, 2024 By Martin Armstrong 

Hiding Money Matress

QUESTION: Hi Martin, What are you thoughts on holding cash into 2028? You said cash was king, but there would come a time to abandon cash. It seems this CBDC thing is what you are talking about. Do you have any time yet?

See you in London

Kind regards,

HF

ANSWER: Europeans are much more familiar with canceling currency. Those governments are much more Marxist and have been canceling currencies routinely since WWII. What happens is you are forced to bring your cash in to swap it for the new version. In this case, it will be digital. What they are going to do is then look to see who accumulated that cash. If it is a large chunk, you may be taxed, and the burden will be on you to PROVE you paid the cash.

You are better off swapping it out for gold, stocks, and even real estate outside of the Blue States and generally cities. As people migrate from those regions, the people left behind will have their taxes increased. California is the #1 state people are leaving. They have noticed, and as I have been warning, you should have got the hell out of that God-forsaken state. They are now imposing an EXIT tax to leave. The downside of real estate is that they impose a property tax on it annually. Some states include even your car. People I know used to have Ferraris no longer because they paid a sales tax to buy it, and then you are taxed on the price you paid for it annually as property tax. If you keep the car for 10 years and it depreciates, the taxes you pay just to have it will consume half the price of the car or more.

We are through the COVID crisis when it was wise to hold the case. Now, you do not want to hold cash into 2028. We are facing STAGFLATION, so inflation will rise faster than GDP. Thus, the purchasing power of cash will decline. Then, when they do the CBDC, which they plan to introduce as soon as January 2025, they will cancel all cash, force you to bring it to the bank, and report how much you had to the IRS.

Aug 14 2023

Americans Tapping into 401Ks amid Private Debt Crisis


From Armstrong Economics Posted Aug 14, 2023

Credit card balances in the US have surpassed $1 trillion for the first time, with balances up almost 20% from a year ago. The Federal Reserve Bank of New York reported that total credit card debt stood at $986 billion in the first quarter of 2023, unchanged from the record hit at the end of 2022. The average credit card interest rate offered in the US over the last three months of 2022 stood at 21.6%, according to WalletHub, a jump from about 18% a year prior. Americans are now tapping into their retirement funds to make ends meet.

Hardship withdrawals allow employees to pull money out of their 401K for an “immediate and heavy financial need.” No one would recommend doing this unless the situation was dire. Bank of America reported that 15,950 employees enrolled in 401K programs made a hardship withdrawal during the first three months of 2023, a 36% rise from Q2 22. Individuals must show evidence that the money will be used for a major hardship in order to avoid the 10% early withdrawal fee imposed for those under 59.5.

It costs more money to borrow thanks to rising interest rates. The majority of Americans do not have money stashed away for a rainy day, and those who do are rapidly draining their accounts to keep up with Biden’s economy. The CPI report in June showed a rise of 3% YoY, but look around, absolutely everything is more expensive. Shelter costs have reached an all-time high and the price of food is on the rise, especially with wheat price manipulation going on using the war in Russia as a guise. Why are we sending hundreds of billions to a foreign nation when our own people cannot afford to live? The masses need to wakeup and get mad at their current predicament before the next election if we even have one.