As reported in the October 13th edition of Fortune Magazine, household debt (credit cards, mortgages, home equity lines of credit, and auto loans) in the U.S. has risen to about $14.5 trillion dollars, an amount roughly equal to the country’s gross domestic product, or GDP. (By comparison, as late as 2000 household debt was only about 2/3 of GDP.) In this country we now spend almost 20% of all household income on debt service.
That doesn’t sound like a good situation (and it isn’t), but here is the real interesting part: As a nation, we are far from broke. We Americans have on hand almost $12 trillion dollars in cash and highly liquid instruments such as money market funds, certificates of deposit, and Treasury bills. We still have a high degree of liquidity, even with all that debt -- almost enough to pay off the debt, if we wanted to do so.
The problem is, of course, that a great proportion of the cash and liquid funds are in the hands of a relative few who have no interest in spending that money to help me (or you) out.