Are you in debt?
House, car, student, credit card loans?
Total US household debt reached a record $18.20 trillion in the first quarter of 2025. This includes mortgage debt, student loans, auto loans, and credit card debt.
What that means is that if the increase in US governmental debt over the last twelve years was instead spent to pay off the debt of people in the US, every American would be living debt free. No mortgage, no credit card, no car, student debt.
Nothing.
My question is, would that have been a better use for the money spent?
I wonder what would have happened if instead of bailing out the banks in the GFC, they bailed out the people instead. For instance, they could have paid it off by percentage. If a bank needed one billion in bailout money and they had personal loan liabilities of 10 billion, 10 percent would be deducted directly from the outstanding amount of every personal loan account. The banks would get their money from all the loans being paid off, but after that, they wouldn't have that loan amount accruing interest. They would still be saved from immediate collapse. Fast forward and the entirety of those loans could have been paid off by the government years ago.
What would people have done?
I suspect that if people had all their debts paid off, it would be a pretty wild spending spree after that, as people's incomes would all become disposable once again. Investing would sky rocket, consumption would sky rocket, and pretty soon, a lot of people would be in debt again. But, not as many.
Americans seem to have a debt mentality when it comes to personal finance, with a lot of people quite comfortable taking loans for everything they want to buy, so they can have it now. Some of my American friends here tend to do much the same as they would back home - living a bit larger than the average Finn in the same financial position. They have lot's of stuff, but also lots of debt.
The "debt mentality" is what makes the US the largest consumer on earth, because the culture is to spend, whether a private citizen, a corporation, or a government. The largest market on earth, is only possible because of the mounting debt burden. And they just keep expanding it in the hope that when the music stops, there will be such a calamity that they won't have to pay it back - as the nukes fly across the skies.
It is a fragile economy.
The US economic situation is not robust, it is highly fragile. As I have said before, the Rest of the World should not be negotiating with terrorist governments. And I use that term in the sense that the US government are looking to get their way by forcing other countries, including allies, into terrible situations. The RoW should abandon all negotiations with the US, and increase the cost of what they send to the US. Make it so incredibly expensive to buy from the RoW that they will have to start their own manufacturing.
Jobs for Americans!
The problem is though, that the US runs on debt and it is able to do that because of international trade demand. Once that demand for their market stops, the debt model immediately becomes unsustainable. The Us will no longer be able to increase debt to cover expenses, because it will be moving "money" from one pocket to another. A closed off to trade America would see it collapse. However, the RoW will be fine, because it can still do deals with 7.7 billion people with a huge variety of goods and services to choose from. This means that the RoW can increase spending by a couple percent, and it would cover the US. And it would be able to do this, because it will no longer have to pay for the privilege of the US market.
All US companies have to pay their full taxes in the country where it is earned.
All those big beautiful, Fortune 500 companies - suddenly aren't so attractive to investors, are they? It is because of these dodgy accounting practices that they can offer higher returns because they can inflate their earnings, by syphoning value out of the countries where they earn it. Local companies are at a disadvantage to the conglomerates like Microsoft, Amazon, Facebook and Apple - because they have to pay their taxes locally. The large tech companies generate little monetary value within a country, but take a huge amount out.
There are replacements for them.
Essentially, with the current US regime, the best course of action for the RoW is to fork them out of the global economy as much as possible. Ramp up production of anything that comes from the US currently, and find alternative sources where possible. Buy *nothing from the US if possible, and sell them nothing also. It will hurt at first, but once that bandaid is ripped off and the wound heals, the RoW can enjoy unprecedented growth in production and consumer spending.
But, the governments won't do that, because the people within have their interests invested in the US too, and most do not have the balls to go against a military superpower. But, what will the US do, nuke the RoW? Maybe. But that just speeds up the likely result of our mutually assured annihilation anyway. Instead, what they might do is try to go it alone for a while and then realise, they fucking hate the changes to their lives that it brings, and then look to rejoin the RoW as an equal partner, not a regime of tyranny.
Nukes are more likely.
Some people think love makes the world go round. Others think it is taxes. But really, it is debt. The debt cycle is the thing that drives the US power over the RoW, and it is also the thing that forces people to become slaves to activities we don't want to do. Debt is a control mechanism that has been created to keep power in the hands of a few, and as a conceptual control to stop people from taking their power back. But remember,
None of the debt is real.
Taraz
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