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.
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.
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.