Americans had come to expect ever increasing prosperity, and were guile to give it up. To continue Americas tradition of prosperity, we turned to debt. Debt allowed Americans to buy today, what we they hoped to work for tomorrow. Consumer debt doubled from 1980 to 2007, growing from 66% of disposable income, to 144% of disposable income.
The doubling of our consumer debt bought America great prosperity.
Our government, not to be left behind, tripled their debt over the same period, from 33% of GDP in 1980, to 100% by 2012. This allowed our country to buy what we other wise could not afford.
As a result of this debt...., Americans have spent their future, and now must begin to pay for past consumption. 2008 was just the MARKER of when we hit the wall.
Some would have you believe that consumer debt can continue to grow forever, say to 200% or 300% of disposable income, and that government debt can expand to 150% of GDP or more. That is the only way we could possibly continue this prosperity charade.
I fear that consumers have hit the limits of their creditors patients, and our government won't be far behind, considering that the Fed bought over 60% of our deficit last year.
In addition, over the past 30 years, consumers have been provided an endless supply of unearned monies through mortgage rate reductions and housing appreciation. In 1980 the rate on a 30 year mortgage was 18%, today they stand at 2.9%. Americans endlessly refinanced their homes, and used these found monies to pay off credit cards, buy vacation homes, cars, refrigerators etc. This once in a generational party "of ever declining interest rates" has also come to an end.
There appears to be no future vehicle available, to create the fake prosperity needed to pave over our excessive spending, and debt.
For the first time in 60 years you hear Americans complaining that the next generation will not be as prosperous as the last. But no one wants to admit that our generation has lived large using debt, and that the bill has now come due.
You can not legislate prosperity, our nation's people must now earn it.