The Debtor Era.
The Debtor Era.
Living on borrowed time & money.
We’re living in an era where very little seems to make sense when it comes to the stock market and real economy given as it seems as if things are ‘booming’.
We’re at the highest levels of debt in credit and household debt ever but the stock market is up and housing is as expensive as ever, globally.
Even down near me in Puerto Rico there is a house offered at $40+ million.
On top of this, we have the US Government pushing its debt ceiling as well.
And if they’re broke and living on debt then why can’t we? Right? That seems to be the mentality, at least to me.
And with this debt ceiling raise they’re pushing the ending of the student loan payment pause.
And more than likely that pause has also fueled this inflation we’ve seen the past few years but what happens when this pause ends?
There are $1.6 trillion in student loans right now and they’ve been suspended since 2020.
This is on top of record credit card debt and interest rates at levels we haven’t seen in decades.
Right now Americans owe $1 trillion in credit card debt.
I have friends that work in the service industry in Arizona (at high-end steak houses) and they tell me the new thing is people coming in for birthday parties ordering maybe 1-2 sides, 1 round of drinks, taking photos then leaving.
And just today someone sent me an Instagram real of an LA-based barber who charges $200 for haircuts and $500 for a house call.
Think about that for a moment because he’s getting it.
And don’t take this the wrong way, I don’t shun entrepreneurship but who are the people that can afford a $200 haircut two times a month?
And that’s the era we’re in.
Save? No. Invest? No. Inflate everything to live a lifestyle that is not real?
Sure.
It’s the American way and it only sustains if the checks to and credit that support it keep coming in.
Just ask the people and layoffs at Twitter and other tech companies.
There’s a scene from Margin call that I always remembered. It depicted the 08/09 crash as if they were Lehman…anyway there’s a trader from the bank talking to an analyst about the collapse then and he says this.
Obviously, that clip above is him discussing the housing crisis of 08/09.
This time it’s different in that it’s not really bad housing loans.
It’s spread into student loans, credit cards, and borrowing and we just cannot stop.
Even with the suspension of student debt payments we still hit ATH credit card spending levels.
Insanity.
In my view, there is no way this sustains and we’re on the brink of some serious consequences in the economy.
The music won’t stop but I certainly think the volume is going to be turned down and when that turn down comes it’s those with cash available that will be able to pounce and I certainly hope that occurs because in chaos comes opportunity and that’s where real money is made.
Thanks for reading.
Dan