Your Credit Card Will Pay for the Next Economic Downturn – The New York Times

Your Credit Card Will Pay for the Next Economic downturn

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Image Credit Cristina SpanòEvery three months, has crested at $1 trillion, now at an average rates of interest of Louis Fed study of generational wealth concluded that the really households whose wealth should be growing are falling behind. "Our company believe many families in the youngest mate we studied here-- participants born in the 1980s-- are at substantial risk of collecting less wealth over their life expectancy than the members of previous generations," the report said.That's an impressive conclusion in an economy that, as President Trump firmly insists, has never ever been much better. It's never been much better for the wealthiest 10 percent of households, who now own about 75 percent of the nation's total household wealth, as opposed to less than 35 percent in the 1970s. Or for the country's richest 0.1 percent, who now own as much wealth as the bottom 90 percent, according to Deutsche Bank. For the other 90 percent, the ability to construct wealth rests on the capability to save, which they can't do if interest rates are increasing and eating into their profits. The personal savings rate, at< a href=https://fred.stlouisfed.org/series/PSAVERT title target=_ blank rel="noopener noreferrer"> 2.8 percent, is heading in the incorrect direction.Raising rates now, perversely, gives the Fed a monetary tool with which they would have the ability to combat the next economic crisis-- by cutting those rates. Which might come faster than anticipated. By 2020, when Mr. Bernanke thinks any stimulative effect of the tax cuts will have run its course, we will be facing exactly what he called a Wile E. Coyote economy, after that overeager animation character.The overstimulated American economy will run off the cliff by itself momentum, Mr. Bernanke worries. That will leave the nation with an enormous federal deficit and very little financial space to maneuver. Having been basically made to pay for the tax cuts for the wealthiest Americans, the remainder of the nation will be staring down the void, too.

Source

https://www.nytimes.com/2018/07/01/opinion/credit-card-recession.html