This old English proverb concisely describes the financial condition of many Americans. Household debt is rising at an 8.8 percent annual rate, home mortgage debt at 14.2 percent. Total debt in the United States doubled from 1998 to 2002, from $16 trillion to $32 trillion and may double again in the next five years. The Federal government, which sets the pace, reported a $555 deficit for the 2003 fiscal year; its total debt is given at $6.783 trillion. For the next two years the budget deficits are estimated at $566 billion to $644 billion each, which should increase its total debt to more than $8 trillion, or some $27,000 for every man, woman, and child.
Economists make an important distinction between “productive” and “consumptive” debt. Although the difference may not always be clear and exact and, therefore, may give rise to much controversy, it is significant as to motive and effect. Continue reading
