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Americans’ credit card debt levels have just notched a new, but undesirable, milestone: For the first time ever, they’ve surpassed $1 trillion, according to data released Tuesday by the Federal Reserve Bank of New York.
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A single income used to afford a house, and family, a car or two, vacations, and retirement savings.
Then we needed families to have two incomes to have that lifestyle.
Then we held on to that system, but had that lifestyle, WITHOUT the building up of any savings, and without the vacations.
Then we needed two incomes just to be able to LEASE that watered-down lifestyle.
And then we needed two incomes and good credit to juggle that watered-down lifestyle, and deferring debt to some point down the road when we assumed we’d be high-income earners.
Now we are in stunningly dangerous territory. We’ve largely given up any luxuries, and we struggle to find the CREDIT to LEASE basic essentials like housing, food and medicine. Often we fail to do so.
Inflation has hit us incredibly hard, but when student loan payments start up in mere weeks from now, it’s going to be CRIPPLING, not just to those with debt, but EVERY business that needs those people to buy their goods and services.
We’ve been robbed of our future by corporate greed and the psychopathic cruelty of the boomer-run government.
… And just in the past 6 months we’ve seen the invention of the first artificial general intelligence. Even if it never got any better than it is today, it would still decimate the workforce. But it is getting better. At a staggering rate. We are headed for a jobs crisis the likes of which has never been seen in all of human history.
Add to that the rise of fascism in a global scale.
Add to that the hundreds of millions of anticipated climate change refugees, and potentially catastrophic failures of the ecosystems which sustain various crops.
Add to that that all of human experience and evolution has left us WILDLY unprepared to understand let alone solve problems of this pace and magnitude.
It is difficult to see how we survive this.
Just to be fair, chatgpt isn’t an artificial general intelligence.
GPT4 absolutely is the foundational block of the first AGI.
I’ve been working with it exhaustively since it was released. I’ve built frameworks around it to give it a memory and other supplements. I have ZERO doubt that this is the first AGI, or at least it’s the engine that powers real AGI.
If you haven’t read this paper, you should: https://arxiv.org/abs/2303.12712
That was researchers using gpt4 before it had guardrails put on its behavior, but also without any supplements to it’s functionally.
Hard definition to fit because it all depends on what you define as ‘general’. Its not great but tbh you can ask it a question about anything and it will give an answer, so I’d argue that’s general enough
It’s missing intelligence though.
ChatGPT uses machine learning to predict a sequence of words, but there’s no thought or understanding of the words.
As opposed to humans who always think before they speak or tweet or email or show up to a protest with an AR-15.
Another fairly soft definition, which to debate I gotta ask what is ‘intelligence’ to you? Defined as rigouroudly as you care to, cause you’ll find its pretty damn hard to get anywhere fundamental.
My point with this is usually if something has no definition, its probably not that good to use as a definition for other things, like AI
Realistically the only way you could consider AI not intelligent is of you specifically require aspects of humanity within it, as such if aliens existed and didn’t have anything analogous to “thought” would they then not be intelligent?
From google intelligence is
the ability to acquire and apply knowledge and skills
ChatGPT is not capable of active learning so no.
If aliens can then yes.
I’m not even talking about human intelligence, most animals have some level of intelligence that chatGPT doesnt have.
ChatGPT is just very good at appearing intelligent.
But of course the AI is trainable, hence how it got trained.
Actively learning doesn’t come up in the definition, but it being able to respond to multiple comments with context shows it does actively learn and understand the topic at hand.
Its for sure much more sterilized than natural intelligence, but tbh the main reason it doesn’t train on its input data is because it would turn to junk fairly quick with the mess of messages it must get.
I’m not sure I get your ‘appearing intelligent’ comment, either something does or doesn’t actively learn under your definition, so where does the appearance come from? Unless you mean because people are undecided of conversation is active or not, which would put it on the fence (again under the active definition)
Not that I support everything about her, but Elizabeth Warren literally wrote the book on our 2 income problem.
Society tracks “family income” and for a gigantic portion of history that was one income, then in the 60s-70s women started entering the workforce in larger numbers (in the US, not sure about globally) and we see family income “rising” so we think “great, we’re growing! We’re doing well!” Except that it only grew because of an additional income.
Now we’re at the point you’ve mentioned where that isn’t even enough anymore especially when the vast majority of jobs seem to offer around 50-60k unless you’re a specific professional/tech bro.
I’m a perpetually single blue collar schmuck, I’ve completely given up on the idea of homeownership, and am very very quickly realizing my retirement plan has to be a shotgun to the head.
What a wonderful future we have to look forward to.
And I’ll just add this so no one has to later: GlObAlLy We’Re BeTtEr ThAn EvEr! Because you know, that totally helps…
“It is difficult to see how we survive this.”
We probably wont.
Rome always falls in the end. The law of entropy is absolute. Like so many empires before us, the sociopathic greed/glut/power lust by the “winners” will be our end. Our height was WWII, I see no shame in that. We did a good thing after centuries of committing enslavement and genocide, then we declined into the sunset for the next empire to write about in its history books.
When the system has become this exploitative, some sharp short/medium term pain is better than limping along for another generation or two when we’ll have to collapse or revolt and do the work of rebuilding we already need to do anyway.
Reminder: being comfortable passing the buck of consequences to future generations is why we’re here.
Very well written and accurate. I just want to add that the financial requirements to raise children have been out the window for some time as well. Not that they would want to exist in a world with climate change anyway.
That’s the thing tho … most humans won’t survive this. The super rich are buying up remote properties/islands at an incredible rate and want Mars asap.
Most of the rest of us will die of starvation, fires, heat, dehydration/poisoned water or the massive storms.
If I’ve learned anything from Musk and Zuckerberg, it’s that the super rich really aren’t all that competent. They know how to operate within the system as it is and leverage their existing advantage. I’m pretty sceptical that they can actually save themselves either. They’ll need other people to do that for them, but the problem they face is, why wouldn’t those people just take charge themselves? Once the system they operate in is gone, what do the wealthy really have to offer? No actual skills for the most part. It’s all socially fabricated smoke and mirrors.
Mars is a pipe dream. Unless Earth goes full Venus, it will be vastly better then Mars for at least the next thousand years. Terraforming Mars would be a centuries long endeavor, and terraforming Earth would be vastly easier.
Technically we are already terraforming Earth. We know what emitting greenhouse gases does, then we still do it intentionally, then we get sad about, but are not surprised about, the results of our actions on the global climate. We are knowingly using technology that alters the global climate at this very moment, and this has already significantly and successfully altered the global climate.
That’s terraforming, baby!
We are just terraforming the Earth to be more hostile towards human life, explicitly to make a tiny population of rich assholes who’ve been promising to whip their dicks out and rain down golden showers of prosperity for a century happier, because us peasants are apparently as fucking stupid and submissive as those rich assholes believe we are.
I would call what we’re doing reverse terraforming. We’re making Earth less Earth-like.
I racked up $12k in credit card debt after college. It was the result of a low paying, dead end job (GameStop), wanting to be independent and live on my own, and no financial education beyond my parents telling the the very basics.
That all changed when I decided I didn’t want to live paycheck to paycheck the rest of my life. Got some licensing and a career type job, met my wife, and the rest is history.
I paid off my credit card debt within the first year at the job, we both paid off our student loan debt (totalling ~$90k within the first 5 years) and now the only debt we have is our mortgage which is fixed at 2.75%. We could pay it down rather aggressively if we wanted but at that rate we we’re simply maxing retirement accounts and putting the remainder into taxable investments instead.
Fuck credit card debt. I believe every high school in America should have a required financial literacy class. Not just balancing a checkbook, but how to build good credit, the dangera of credit card debt, predatory loans, the benefits of saving for retirement early, basic investment principals, and anything else that would make a young person financially literate early in life.
I’m starting to think that the reason why they don’t teach financial responsibility in school is because banks would lose less people to prey off of.
I wouldn’t be surprised if that sort of education is heavily lobbied against in Washington!
Education is certainly lobbied against in Florida. Interestingly enough, I do believe Florida has mandatory personal economics in schools.
No one has enough money to live anymore. This isn’t a problem of people being reckless, they’re using credit because there isn’t enough money coming in to pay for everything.
People are definitely being reckless AND things are being crazy expensive nowadays.
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I’ve lived through enough financial crises that constantly hearing that (“Low unemployment! Go spend money! It’s fiiiiine, everything is GREAT!”) for the past year has made me a nervous wreck.
Consumer spending is up. Unemployment is low. Wages are up. Inflation is down.
That said, no one should choose to spend based on that. People should choose to spend based on their own personal financial security.
Things are only crazy expensive because wages and salaries don’t follow along.
I agree
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I would say depends on how often you are taking $3k for vacation and how long it takes to pay it back. If you are taking vacation more often than you can pay back, then that’s reckless.
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Sure it does. You got ground level which is trust, above that central bank, above that fiat currency, above that companies/people, and above that banks.
You orders machine from my employer. You put some down and the rest you pay on delivery. To buy the raw materials from middlemen, we put some money down and pay the rest on delivery (or use a po but that is complicated way of nearly the same thing), the middlemen put some money down and pay the rest on delivery, and the employer of them hasnt been paid enough yet so is borrowing some from the bank and is depending on two week payperiods. The employees are renting and owe money at the end of the month to a landlord who is still paying off a mortgage to a bank, who is using deposits that can be summoned at all times…
The same x amount of money is multiplied. This x amount of money becomes y*x amount of debt. It is all abstractions on abstractions with no bottom. Since even if you say trust is the bottom it is really just trust that the top of this process will continue to work.
Sleep tight.
Wait wait wait., but that just sounds like feudalism with fucking hedge fund bros, real estate speculation, and a bunch of extra goddamn steps…
Well I mean I don’t think your life is as bad as a 12th century Russian serf.
Indeed, even Kings would envy us right now. Just even the luxury of having to not slave away for weeks just for a lump of stale moldy bread is a marvel.
We have an hyper abundance of food at our hands. You can even drink a delicacy called coffee together with another delicacy called cinnamon without murdering countless on the way to your table together with the miracle of milk kept fresh through days or even weeks or months without it even getting a stale whiff.
There is even more to that, but the luxury of partaking in it and complaining about it, thinking our lives are somehow worse, while trying to destroy what countless generations sacrificed themselves for, knowingly or unknowingly, is the biggest luxury of them all.
Paying a portion later means more cash can flow through the business and provide utility today. Your post implies that every business operating this way is effectively insolvent without access to credit, but even if your employer has the money to pay for the raw materials today, it generally isn’t in their best interest to do so
Sure. There is going to be variation. Some companies are going to be money empires, I have heard ship builders usually are but can’t confirm that. Plus you got like tech startups that can spend a decade without making a penny.
And yes it generally isn’t a good idea for a business to pay for everything right away. If they run low on cash they will have to borrow vs delayed payment means an interest free loan. Back in my freelancer days I used to get furious about net-90. Do all the work, lay out all the expenses, and still have to wait 90 days to get paid.
Without trust the whole thing burns to the ground. Good thing everyone trusts that the banks won’t fuck us over and demand a bailout, that will never happen.
Stop making points, but you’re totally right… How I look at it at this point is it’s like gangs… ya I know I owe you 30 trillion, but I’m giving you hundreds of billions a year. And I have more muscle than you. So why would you try to collect when I can kick your ass and you still get enough to pay your debts without conflict… I want someone to correct me, because Ive spent a lot of time trying to understand more nuance to this situation
Edit: I realize I’ve missed some punctuation. If you’re confused, just ask
America has never had a larger population. More people, more credit cards, more credit card debt. Seeing a per capita breakdown, or defaults per 1000 people might be better indicator of economic turmoil.
and there are people like me who buy everything with a credit card but pay off the entire balance each month
even though I technically have a credit card balance it gets reset every month and I never pay interest or late fees so the numbers don’t tell the whole story
but I’m sure there are an alarmingly large number of people who actually are buried in debt, especially with rent and other costs rising so it won’t be pretty when things reach a tipping point (probably already have…)
Seriously. I get free first class international tickets and a few hotel room nights paid every year with points and miles I get from credit cards, every year. And I use my credit cards for business expenses and get even more as a result.
Why would I ever use a debit card? I like full reclining on the flight back from Europe.
I would like to see some more meaningful metrics than offered in this headline.
Stop trying to throw statistics into sensational headlines!
Or maybe interest paid. I sometimes have a higher balance for the month, but I always pay it off entirely. Nonetheless, my credit score fluctuates based on the balance at the time of reporting.
I’ve noticed that too. It should not count as a balance if you pay in full every month. I assume this is counted towards this trillion dollar amount too which it should not.
Funny how the “You took a loan, pay it back” idiots never seem to care about dischargeable credit card and business debt.
I guess that kind of debt needs a safety net since they might have some of that kind, while new adults who committed the crime trying to better themselves, that pursue integral vocations that society desperately needs but don’t pay well, like teaching and counseling, should just fry like piggies while their fellow Americans laugh at them out of sweet, sweet schadenfreude.
Our values are wrong.
Man, you’d think after the Great Depression and the recession of the last naughties we’d have figured out that credit is a disease and we should stop participating in it so often.
it’s more a necessary of modern day life, with an economy designed around squeezing every penny out of people, there’s nothing left over for savings, there’s nothing left over for that weird sound your car started making, or even just a moment of happiness from a new TV purchase or a holiday or whatever.
It’s really disingenuous to blame it on the personal responsibility aspect.
That’s fair - I more mean as an establishment, but I guess I do have some victim bias in the back of my mind. I guess we’ve locked into a vicious cycle where it started back out where credit wasn’t bad, so creditors started charging more and the cycle continued until credit is almost necessary, but is a strangle because the snake wasn’t seen until it was already constricting us.
I will blame the consumer culture of the US (and the banking industry and media that promotes it; I can’t speak to other countries). They have made always having a balance on one’s credit cards the norm. I’m teaching my kids that credit cards are short term loans with usurous interest rates, that you should never borrow more than you can pay back within the month, and that you should never carry a balance. I had to teach a friend in his 30s that you shouldn’t carry a balance - he thought he needed one in order to maintain or improve his credit score. I’m sure he didn’t make up that misinformation- someone in SM surely promoted that idea. ETA: Fixed a typo that changed the meaning of a sentence.
It’s not the consumers’ fault that between staggeringly high rent, staggeringly low wages, and massive inflation, there isn’t space to save for your car suddenly developing a fault.
As I told the other person, blaming personal responsibility here is silly given the last decade.
I admittedly haven’t looked at the article, but they are likely measuring based of a fixed snapshot in time, which tells you zero about the actual debt.
Example: at any given point in the month I have 5 figures of CC debt, but I always pay every card in full each month (I never carry a balance) and have enough money to zero everything out if something happens. Because of this it looks like I have high debt load when I really don’t. I do this because it simplifies payments, allows me to collect rewards, keeps my bank account/debit card out of mainstream use (which helps prevent my account info from getting stolen/misused) and allows cash to stay in my accounts just a bit longer earning that sweet 5% interest.
That being said, not everyone does that and many folks are likely in over their head.
Debt to income ratio is key. However, I believe that parameter would be more difficult to estimate.
Where are you getting 5% interest?!?
Ally is at 4.25% straight up saving account Vanguard Treasury Money Market VUXSS is at 5.15% right now.
There are a few online only banks that are above 5% also.
Fidelity has a number of funds around 5%. A fidelity brokerage account auto invests in SPAXX, which is 4.96%. SPRXX is 5.02%. These accounts are insured, and the cash is completely liquid, a debit card tied to this account works normally, for example.
When you already have a bunch of money you get higher rewards and pay lower interest so your money flows through their balance sheets.
You don’t pay amy interest if you pay in full within 30 days of the statement date.
Man, I knew that COVID-19 caused reductions in spending, but I hadn’t realized that it had caused such a significant payoff of debt. Like, I could have believed it causing an increase rather than decrease in credit card debt.
I’m surprised by the increases before and after, though. You’d expect some increase over time just due to inflation and growth of the economy. And that chart isn’t zero-valued.
Lets check how much is just inflation…
gets inflation calculator
Okay, so inflation is responsible for a 32% increase between 2013 and 2023.
There was a 49% increase in credit card debt over the same period.
So most of the increase in the chart is just inflation.
Population increased by 6.5%.
So that explains a 40% increase, together.
And there’s a gradual increase in the size of the economy over time. I don’t know how that’d best be measured in terms of what should translate into credit card debt.
But point is, while there’s probably some increase there, it’s not a huge one in real, per-capita terms, which is what you’d care about.
While a sanity check on the absolute value is good I would argue that the most impactful data presented here is the rate at which debt is growing.
Yes, debt was paid off during COVID but now that the free money has dried up people are racking up debt much quicker than before. So while the current value might be in line with previous trends the rate at which debt is accumulating is what is alarming.
It’s unlikely for that trend to slow or stop unless real wages increase, prices fall, or demand drops. We’re seeing some of that but apparently not enough.
I’m doing my part!
Would you like to know more?
Waiting for them to universally forgive missile loans. Man why would you spend so much money on missiles, of course you can’t pay that back, even if it makes you a higher earner in the future
The credit card companies want you to be in debt. That’s thier entire business model. In fact, it hurts your credit if you never have any debt on your cards.
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Why did your credit take a huge hit, due to non payment for X months?
That’s generally how it works.
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I guess it’s time to dust off that credit card and join the fun
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I have never had a credit card. I have no plans to get one. I have no idea what my credit rating is either. And until I have to know, I don’t care. I am not in any debt though.
You should probably still find out your credit score/rating though, especially since it’s free. Identity theft is a real issue, like someone opening a line of credit in your name and fucking up your rating when you actually need it for something (buying a car or house, or anything that requires a credit check).
Ok, that is a fair argument. I will look into it. Thank you.
Another case for getting a credit card is the rewards and protection. I always pay on time and never have to pay interest, so I only gain from cashback rewards and don’t lose anything by using a credit card. Banks are also very strict with fraud (it’s their money you spend before paying it off after all), and they will side with you if your card gets used to pay for something you did not authorize. Lastly, it’s becoming a hassle to pay cash nowadays with most establishments going cashless.
As long as you always pay it off on time, there aren’t much downsides to maintaining a credit card, regardless if you care about your credit score/rating or not.
You can also put a freeze on your credit via the big three credit agencies. That would prevent someone from opening ip a credit card or taking out a loan in your name.
You’re right, but it’s a shame the system is designed to punish people who don’t have an interest in participating at this time. Fraud should be the responsibility of the credit card companies not the users.
I was like you and got screwed by it. That’s the unfortunate part of the system for us. Credit rating isn’t rating of trustworthiness, it’s a rating of likely-to-take-debt/trustworthiness. Never having credit is often “worse” than bad credit. If you ever do try and take out a loan for a car or a house, you will have fewer and more expensive borrowing options.
The play for people like us is to open exactly 2 sources of credit, use one as autopay for static bills, and automatically pay it every month. Use the other for dynamic expenses, but monitor and pay it off in full whenever it reaches 30% utilization, or 25 days, whichever comes sooner.
One can get the benefits of credit without actually accruing debt. The way you use your cash/debit, you already don’t spend money you don’t have. Just continue to not spend money you don’t have, but get the benefits of the system. Be a “deadbeat” as they call us. Us deadbeats actively cost the system money by never carrying balances that accrue interest.
when you “have to know” is the worst time to find out that it’s not good.
Possibly, but it has not been a problem in my life so far, so either it’s good enough that no one cares when it’s come up or I’ll be in trouble one day, I guess.
yes that is indeed how you create future problems for yourself.
but it has not been a problem in my life so far
Ignoring it is a sure fire way to let someone else make it a problem for you.
Maybe, but it’s worked for 46 years now.
Same. Unless you’re buying a house or a new car I haven’t run into any issues.
I use my credit card for every purchase I make and get 1.5% cash back. I pay off my balance every month in full to avoid any interest. That 1.5% can add up pretty quickly and it’s basically free money.
If you lose your job though that free money dries up lightning fast
It’s free only if you have the ability to fully pay off your card every month, otherwise it is not free due to interest, yes.
And everything costs 5-10%% than it would without all the cash back and other rewards programs.
Tricky part here is that an easy way of building credit is by use of a credit card. If you can’t buy a house in cash, then obtaining a good mortgage becomes difficult. I’d recommend the happy medium being one of those preloaded credit cards where you pay $1000 up front or what ever and just use that for day to days… being out of debt like you are, though, is one of the most liberating things one can ask for
If you treat them like a debit card, there aren’t any of these issues. I have a credit card that I use for all everyday expenses. Every month it’s paid off so it never acrues interest. My credit score is great and the card offers some other benefits too.
If I lose my job the risk I have would only ever amount to one month of spending, which is easily covered by my emergency fund.
Thing is, by the time you have to know, you’ll need to have a history of good credit.
I have one credit card. It’s fully paid off every month automatically, because I spend less than I make.
Sorry guys I’m trying to hit my sign up bomus
