http://www.321gold.com/editorials/benson/benson100705.html
I appreciate the concern this writer shows for Americans who are struggling, but as usual with most US fiscal situations, you’ve got to wonder if they’re still in the “giving a man a fish” mode, rather than “teaching a man to fish” .
Worse yet, for consumers making credit card payments, the US Treasury has new regulations that will come as a real shock this fall. The Treasury has the authority to set minimum principal payments on credit cards and is increasing the minimum from 2 to 4 percent per month. For the average American with a $10,000 credit card balance, that increases the minimum monthly payment from $200 to $400. For the big spender with $50,000 in credit card debt, the monthly payments would pop from $1,000 to $2,000! Needless to say, a large number of people are used to paying the minimum every month, and millions of card holders are maxed out on numerous cards and barely meeting monthly payments. So, even if prices weren’t rising, the American debtor will be getting hung out to dry by a noose of credit cards around their neck.
A fundamental problem with consumer spending in the US is the encouragement to buy buy buy. Certainly the Bush administration is quite happy to continue asking NOTHING of its citizenry in terms of economising or conserving, but this culture of spending outside one’s means has been a long time entrenched in the country. Worryingly, it is eroding the middle class, which historically has proved the bastion of democracy. Jimmy Carter, come back – all is forgiven!