Over the last couple years the mainstream media continues to pump the economy saying that the worst is now behind us and everything is getting better. If you're living in middle America, you would know that this is just plain old crazy talk. In 2010, the US saw a record number of Americans filing bankruptcy because they had no other way out. Many of these same people had lost their job, lost their home and started losing their hope. With no other choice to stop aggressive creditors they had to file bankruptcy.
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Since 2010, the number of those filing for bankruptcy has now declined and the media used this as a platform to tell the world how good things are. The St. Louis Federal Reserve recently released economic data regarding unemployment. In this data, it showed that long-term unemployment under this administration is at the highest level since World War II. Many experts believe that the president's pushing to extend long-term unemployment benefits might be the cause of this problem. According to the data released, the average duration of unemployment in the US is now 40 weeks. This is double the highest level of 20 weeks that we saw in the last three recessions. So if you wonder why less people are filing for bankruptcy, it's not a priority as long as they can continue kicking the can down the road by extending their unemployment benefits indefinitely.
Let's face it, the United States is broke. The government is closing in on $17 trillion in unpayable debt and growing. Yesterday, the Fed came out and said that Congress needs to remove the debt ceiling as it no longer has any value. The way things are going, that is a true statement because the American people will never be able to pay off the debt that the federal government signed them on to. Not only is the government borrowing themselves into oblivion, the American people are right behind. This is one reason why I believe the number of those filing bankruptcy continues to decline. The banks are once again pushing money into the economy via credit cards and personal loans. Where people used to be living paycheck to paycheck are now learning to live from short-term loan to short-term loan.
One credit agency stated that they are seeing people borrowing more money to meet payments on their previous loans. As long as the banks will continue lending their phony money that they just printed, people will continue to try and do the right thing by paying their bills. Creditors make it clear to the debtors that bankruptcy filing is not a good way out of debt. Many debtors believe that if they file bankruptcy they will never see credit again, including never be able to buy a home. This is something that creditors tell debtors, when an individual is considering bankruptcy. Now, many of these individuals are falling into the poverty trap as they have to borrow money at higher interest rates to continue feeding the machine.
Prior to 2010, this was not possible as there was major belt-tightening going on in the financial industry. Even people with good credit lost large available balances on their credit cards and lines of credit. After QE1, QE2, "The Twist", since September QE3 and in December QE4. What is interesting about QE3 and QE4 is that they are for an infinite timeframe. Both of these total $85 billion a month in quantitative easing or printing of US dollars to buy mortgage-backed securities. As the printing presses continue to print billions of dollars, the US is headed for Weimar Republic style inflation. It didn't work in the past and it won't work now.
This is the time that Americans need to be honest with themselves and about filing bankruptcy before it's too late. People really need to wake up, shut off the reality shows and get back to the values of yesteryear. Our grandparents used to pride themselves on living a debt-free lifestyle and we as Americans should follow suit. Even if it means filing Chapter 7 bankruptcy to get a jumpstart on becoming debt-free, it's well worth it. Living beyond your means borrowing money to pay your bills of the past will only end badly. A person in debt should not listen to their creditors, but speak to a bankruptcy attorney about their financial situation to get a truer picture.
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