It isn't just the increase in payday
loans which concerns financiers, but the overall economic growth of the
country. The high debt being carried by Americans is crippling the government's
attempts to fix the problem. Should the Feds do more or less? What about the
housing industry, do we let it hit bottom or try to save it? These are just two
of the many economic areas which must be addressed in order for the country's
financial status to improve.
One of the first lessons in
macroeconomics is to understand aggregate demand. Aggregate demand refers to the
demand placed on final goods and services at one time with the current price
applied. When the people of a country are not placing a demand on goods and
services, then the demand lessons which affects the country's economics. Simply
put, if there is no demand, the supply sits waiting to earn revenue.
Can the U.S. economy ever recover
with private debt remaining so high? Many experts will so that it cannot. It
takes the people of the nation to spend money in order for the businesses to
thrive. Stagnant spending by the private sector has stunted the growth of
businesses, especially the smaller businesses. The small businesses are usually
run and funded by private family finances. When these finances are corrupted
with large debt for personal expenses, there leaves little room for additional
debt for business purposes.
Debt is not all bad. The nation was
built on the ability to borrow and lend the fact that it got out of hand and
has now created many problems; it shows that it is being mismanaged in the all
sectors. The housing fallout could have been a good lesson for the private
sector on how not to live too far beyond their means, but the spin placed on it
by the media that it will "bounce back" kept people from learning a
lesson from what had happened.
Loans which were taken out
irresponsibility are one some of the major culprits with the economic problem.
Lack of income, no job, or loss of job is preventing issues with loan payments.
Booming house prices being sold with variable interest rates have caught many
people in a trap of not having the extra income to make the payments once the
interest rate moved upwards. The home rates dropped instead of skyrocketing as
promised. Homes could only be sold for a portion of what was owed. Those who
thought the home was a good investment did not pay attention to how other
personal debt would play into their finances with a failed market.
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