Why You Should Expect a Once-in-a-Lifetime Debt Crisis
Interest-Rates / Global Debt Crisis Oct 09, 2023 - 09:50 PM GMTU.S. credit card debt surpasses $1 trillion
On a national level, a debt crisis occurs when a country is unable to pay back its government debt. This might result from government spending exceeding tax revenues for an extended period.
On an individual level, a crisis can result from too little income and too much debt -- that simple. This sometimes means defaulting on a car loan, for example, or even declaring bankruptcy.
Part 1 of the June Elliott Wave Theorist, a publication which covers major financial and cultural trends, said:
A debt crisis is brewing, and higher long term interest rates will add to the pressure.
Indeed, as Kiplinger noted on Aug. 18:
Credit Card Use Spikes for Cash-Strapped Consumers
Credit card use amps up as consumers reckon with inflation and higher interest rates; 39% of Americans living paycheck-to-paycheck, study shows.
The August Elliott Wave Theorist had more to say about the looming debt crisis as it showed these side-by-side charts:
Excess savings US households built up during the pandemic are nearly gone. ...
At the same time, consumers are borrowing to stay alive, driving indebtedness to yet another milestone: Total credit card debt in the U.S. has just surpassed $1 trillion. Will consumers be able to pay it off?
They had better do it fast, because credit-card interest rates have just soared to a new all-time high above 20%!
And bond yields (and interest rates) continue to climb (Reuters, Sept. 21):
TREASURIES-Two-year yields hit 17-year highs ...
Elliott Wave International warned subscribers to prepare back in 2020 when interest rates were near zero.
Of course, a lot of people are wondering if rates are headed even higher.
Remember, it's the market which determines the direction of interest rates; the Fed merely follows.
A key way to keep tabs on widely traded financial markets is to employ the Elliott wave method.
If you'd like to delve into the details of Elliott wave analysis, read Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:
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This article was syndicated by Elliott Wave International and was originally published under the headline Why You Should Expect a Once-in-a-Lifetime Debt Crisis. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
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