Debt-Burdened Americans: Can They Keep Buying Crypto?

• US faces record public and consumer debt, raising concerns about affordability and economic stability.
• Public anxiety about debt increases, with 57% favoring reduction, suggesting a societal move towards fiscal responsibility.
• Policymakers need solutions for sustainable growth to avoid a “debt trap” scenario.

Despite positive economic reports, the U.S. faces a looming debt crisis, raising questions about the sustainability of consumer spending, including investments in cryptocurrency.

Debt: A Growing Concern

Despite the positive reports, public debt stands at a historic $34 trillion, with consumer credit card debt reaching $1.13 trillion.

“National debt, if it is not excessive, will be to us a national blessing,” Alexander Hamilton remarked. But the current debt rise questions the sustainability of fiscal policies and their long-term economic impact.

Rising interest rates amplify the burden, impacting housing affordability and economic prospects.

Loss of the dollar’s “convenience yield” status could exacerbate the debt by 30%.

Consumers Feeling the Squeeze

The New York Fed report highlights rising financial stress in these demographics.

Credit card debt is at record highs. It increased by $50 billion (or 4.6%) to $1.13 trillion from the previous quarter, with delinquencies increasing, especially among younger and lower-income households.

“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw.

Investing in Uncertain Times

Diversification is key, but relying solely on traditional assets like the S&P 500 leaves investors vulnerable to potential downturns.

Some advocate for crypto exposure, particularly considering factors like hash rate for long-term value creation.

2024: A Crucial Year

Despite positive economic reports, fundamental concerns remain regarding the sustainability of current trends.

Policymakers face the challenge of crafting solutions that promote sustainable growth without creating long-term liabilities.

The current trajectory resembles a borrower trapped in a cycle of debt, highlighting the need for a transformative year in 2024.