Here’s a look at American indebtedness, by the numbers (current through April of 2014):
- $11.68 trillion in debt
- $854.2 billion in credit card debt
- $8.15 trillion in mortgages
- $1,115.3 billion in student loans
While those numbers – trillions and billions – sink in, let’s keep going.
The U.S. economy depends on a careful blend of debt and credit. Businesses benefit from extending credit to consumers: consumers are able to increase their spending power, businesses are able to increase their profits, and if consumers take a little time paying back the credit they’ve used, credit card companies and banks earn a little more through interest.
The system, though, depends on consumers paying back their debt. When consumers don’t pay back their debts, the system starts to get clogged, credit isn’t as easily extended, prices go up, and consumers spend less.