Recent reports indicate that the level of household debt in the US has reached a record high of over $14 trillion. Dollar devaluation and a flawed banking system has been the catalyst but can bitcoin be the solution?
Deepening Debt Crisis
According to the Federal Reserve’s Quarterly Report on Household Debt and Credit, total US household debt reached a record $14.15 trillion at the end of the year. This follows an increase of $193 billion, or 1.4%, in the fourth quarter of 2019.
The report noted that total household debt is now nominally $1.5 trillion higher than the pre-recession peak of $12.68 trillion in the third quarter of 2008.
It has been the 22nd consecutive quarterly increase in household debt which has been led by mortgage balances. Housing balances rose $120 billion over the quarter while non-housing balances soared $79 billion in the fourth quarter to hit a record $4.2 trillion.
Student loans, auto loans and credit card balances make up the bulk of this frightening statistic.
Senior vice president at the New York Fed, Wilbert Van Der Klaauw, noted that the data showed that “transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers.”
Goldbug and bitcoin detractor Peter Schiff blamed a weakening economy for the increase which is contrary to what the president has been claiming about the financial state of things in the country.
“If the economy really was strong households would have the added incomes to pay down their debts. Instead a weak economy has forced more families to go even deeper into debt to survive.”
Banks are yet again at the center of the crisis as interest rates plunge into negative territory and the central bank continues to bail them out with its ongoing repurchase agreements.