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Along with the deep debt of the U.S. government (over 17 trillion in early 2014), many corporations and American consumers are in debt. There is massive Economic Dysfunction. By the early 1990s American consumers owed $3.2 trillion on credit cards, car loans and mortgages. Given the liberalized bankruptcy laws, personal bankruptcies have been rising since the early 80s with a record 720,000 persons filing for personal bankruptcy in 1990 compared to 259,000 people in 1980. In 1988 personal bankruptcy losses totaled $12 billion. As bankruptcies increase so do losses. The highest bankruptcy rates are in the Deep South and the Southwest, with the Northeast and upper Midwest having the lowest rates.
American consumer debt total through January 2014:
- $11.36 trillion in debt
- $856.9 billion in credit card debt
- $7.93 trillion in mortgages
- $1.049 trillion in student loans
- Average credit card debt: $15,270
- Average mortgage debt: $149,925
- Average student loan debt: $32,258
Although overall credit card debt is down, and the average indebted household is less underwater relative to the average overall than before, falling indebtedness is largely due to defaults rather than repayment. (Source: American Household Credit Card Debt Statistics through January 2014, from nerdwallet.com)
Credit card debt
And while most keep their homes and jobs after bankruptcy, many people (especially the working poor) are constantly on the edge of being homeless. The working poor are usually renters rather than homeowners, and while their rents have been increasing, their inflation-adjusted incomes have decreased.
Many people (especially the working poor) are constantly on the edge of being homeless
Income disparity is becoming more extreme the further one goes up in the income distribution. (Source: The United States of Inequality: The Stinking Rich and the Great Divergence, By: Timothy Noah, Slate.com, 14 September 2010)
Income inequality is increasing and becoming permanent, reducing social mobility in the U.S.
Upward redistribution of income is responsible for about 43% of the projected Social Security shortfall over the next 75 years. (Source: “The Impact of the Upward Redistribution of Wage Income on Social Security Solvency” Center for Economic and Policy Research, 12 February 2013)
The Brookings Institution said in 2013 that income inequality was increasing and becoming permanent, reducing social mobility in the US. (Source: Vasia Panousi; Ivan Vidangos; Shanti Ramnath; Jason DeBacker; Bradley Heim (Spring 2013). "Inequality Rising and Permanent Over Past Two Decades". Brookings Papers on Economic Activity. Brookings Institution)
Inflation adjusted increase in after-tax household income between 1979 and 2005 for the top 1% and the four of the five quintiles (Source: Income inequality in the United States, Wikipedia)
As you can see, the income gap is only getting worse
The gap between rich and poor has increased and it is now a canyon