Ed Andrieski, AP
Statistically speaking, American households deserve a pat on the back for debt reduction over the past four years.
In reality, the worst ways possible have been used for the decrease, according to an article by The Atlantic.
In a time of crisis, there are a few ideal ways for a nation to overcome it.
“The ideal way for a country to deleverage would be for incomes to rise faster than debts,” said Matthew O’Brien, in his Atlantic article. “The second-easiest (but far from ideal) way would be for practically every household to default on their debt, forcing the banks to lower credit standards, which might encourage people to borrow their next batch as the economy improved."
The change has come in a combination of both for the negative, O’Brien said. As wages have stayed the same as well as low inflation, cutting debt is hard without trimming other spending elsewhere.
Even though large numbers of households have defaulted, there were not enough to cause banks to lower credit requirements.
- 25 states with the lowest levels of personal...
- 9 startup companies perfect for your family
- Consumer index climbs to record level in Utah
- Dave Ramsey says: Don't touch that 529 plan
- BYU grad strikes gold teaching via online...
- Balancing act: First 'real' job teaches...
- U.S. economy grows at scorching 4 percent in...
- Small cars fare poorly in crash safety tests
- Fast food workers vow civil disobedience 18
- Dave Ramsey says: Don't leave an estate... 13
- BYU grad strikes gold teaching via... 12
- Dave Ramsey says: Don't touch that 529... 8
- Remodeling? Experts say some projects... 6
- Study: 35 percent in US facing debt... 5
- U.S. economy grows at scorching 4... 5
- Consumer index climbs to record level... 4