Sunday, December 27, 2020

Bill Crawford: A Time for Returns, Credit Cards, & Everlasting Debt

How did they know back in the 1700s when they coined the phrase “many happy returns of the day?” How did they know that the week after Christmas in America would become filled with joyous long lines of festive people returning unwanted, unappreciated, and just plain ugly gifts to Walmart, Target, and more?

Ah, yes, ’tis that gala time which also includes pondering how to pay off the credit cards overstuffed with presents, feasts, and Christmas trips.

Well, for some. COVID-19 gave us too many Cratchit families with already stuffed credit cards from everyday living expenses. Congress moved to help, approving a $600 additional check for all non-wealthy Americans. As this was written, President Donald Trump was, at the last minute, demanding $2,000 checks, leaving any gift up in the air.

Either, of course, would be charged to America’s already overextended credit card.   

Hmmm.

The average credit card interest rate, according to Wallet Hub, is 17.98%, but Congress can borrow for less than 2%. Regular credit cards require payments that cover interest and principal, but America’s credit card only requires interest to be paid.

Huh?

Yep, that’s the latest trend in government finance. A recent article by Reuters explains that a deficits-don’t-matter and government-debt-doesn’t-have-to-be-repaid world view is becoming increasingly common. “Government debt will stay with us forever. It doesn’t have to be repaid. They can (roll over and refinance) given the cost of debt servicing and the current mindset at central banks.”

This happens when central banks become major purchasers of government debt and take aggressive action to keep long-term interest rates low. The Federal Reserve began moving in this direction in 2010, greatly expanding its balance sheet and the types of debt it purchases. As long as rates stay low, governments in collusion with central banks can simply refinance debt instead of paying it down.

According to Reuters, global indebtedness is set to reach $277 trillion by year-end, an increase of $15 trillion this year, 60% of which came from governments.

Does any of this make you feel better about our national debt, which hit $27 trillion this year and will jump even higher next year. (Note: when President Trump took office in January 2017, the national debt was $19.9 trillion.) Meanwhile, personal debt jumped to over $14 trillion and corporate debt surged to $10.5 trillion.

Yeah, these numbers are so large as to be meaningless to most of us. Here are some more relevant numbers (most recent data 2019).

Average personal debt per capita in Mississippi was $33,140, which had the lowest per capita income at $23,121, a 1.43 debt to income ratio. Not surprisingly, Mississippi had the third highest bankruptcy rate in the U.S., trailing only Alabama and Tennessee; the fifth highest credit card delinquency rate, trailing Nevada, Florida, Arizona, and Arkansas; and the fifth highest mortgage delinquency rate, trailing New York, Connecticut, Delaware, and New Jersey.

What does all this mean for the New Year? Good question. But, the one thing we do know is we should wish for no return to the day-to-day calamities of this past year.

“Give thanks in all circumstances” – 1 Thessalonians 5:18.

Crawford is a syndicated columnist from Jackson.

 

11 comments:

Anonymous said...

I give thanks for this shitty article.

Anonymous said...

Now that Trump and the "fiscally responsible" Republicans are about to become the loyal opposition, we can once again turn our attention to the national debt and out of control spending. Fortunately the "progressives" will give too much to the wrong people and make the spending so unacceptable that we will elect a Republican administration in four years. Then we can once again ignore the national debt and the out of control spending and ....

Round and round we go...

Psyche 101 said...

I don't know the guy from Adam; but, I took psychology at Delta State and I can assure you he's pissed because he got no presents. Well, he did get thin, knee socks and a pack of emery boards...but, still.

Anonymous said...

I'll tell ya what all this means: too many have too much. And I ain't talkin about the wealthy. People that can't afford it have too much. They have too much meaningless possessions made in China thanks to the likes of Wal-mart. The Luxuries of yesterday have become the necessities of today - 99" TVs; 10G cellular devices. No one should suffer from want in this nation of wealth, but too many are living off the government and buying what they can't afford. Welfare was designed to be a short term safety net, but too many have turned it into a foundation for a permanent life style.

Anonymous said...

When congress approved the stimulus package people expected that money & spent with that money getting to then by next credit cycle.
But, Trump pulled a Grinch on everyone & refused to sign it. If he doesn't sign in 10 days Congress will have to start over again!.
This pandemic & Trump really showed how screwed up our government really is!

Anonymous said...

finally, a really good blog post by Crawford. A return to his roots, not railing against Reeves in his role as a spokesperson for the Hospital Association and his apppointed role as someone promoting their agenda and the conservative programs of Reeves (and Bryant and Barbour) against his Democratic policies of the MHA, Waller and all their anti-Tate groups.

This article speaks for the Crawford of years past, before he was paid to fight Reeves - but rather fight the unrealistic spending of those in Washington with their ever spending policies (both sides), increasing the national debt and Trump's narcasissist programs that lead to nothing but a bigger deficiet.

Too bad the Trump loyalists will not see it this way, but will attack Crawford on general principals - because he has lost the way over the past two years for the wrong reasons. If he really cared about deficiets, and spending, and bond indebtedness, he would never have joined with his medical financial backers against real conservative spending policies.

Tate has been wrong as well, trying to join with Trunp at the hip. But that was politics in a 60% Trump state. Crawford doesn't share that sane reason. He stands to speak from an ideological stump apart from that fray. Glad to see that he has (at least for this post) moved away and back to his roots.

Anonymous said...

2:20 - Remember that guy named Obama?

Anonymous said...

When I hear anyone complain about the “National Debt” I immediately know they are basically an idiot and I just stop listening to them.

Our money supply is based on that debt. Our banks operate on a Fractional Reserve system. In reality that means they have no reserves, but merely a ledger of loans on good faith and the hopes of collecting interest. The money supply is printed with nothing backing it but the federal debt (treasuries) and the faith that the US Government (taxpayers) will always pay it.

That is why we didn’t have federal income tax until the Federal Reserve Act. It’s all a big scam that depends on the ignorance of the populace to keep it from collapsing.

“Give me control of a nation’s money supply and I care not who leads her”

Anonymous said...

to 12;29.......to the contrary thats a very good article on economic truth, which is very rare. you are just to stupid to understand it.

TDS Is Terminal said...

Get over yourself (and IT), 7:14 and 8:42. Trump did what he should have done.

Anonymous said...

When some in the business corporate world can increase interest to 68%, debt for individuals in insurmountable.

Yet, earning that rate of interest for individuals is impossible.

The problem began when usury was abolished and interest could be more than 5% over prime.

It was exacerbated when " good will" was removed from financial statements and consumers concrete value to a company's worth eliminated. There's no value in meeting consumer needs with quality or fair treatment.


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