Debt Generation

Over the last 10 years or so consumption has been fueled by Americans taking out loans to not only buy houses, but cars and consumer goods. It was a good way to have fresh money in the system, without taxing the rich or driving up inflation, by firring up the printing press unaccounted. What will happen if an ever increasing percentage of debtors end up taking their debt to their graves?

reply to post by Merinda


I think the opposite is occurring. More and more people that I know are spending cash. My family and I routinely use cash even for purchases up to several hundred dollars. When I say cash, I may put it on my American Express or another credit card, but pay it in full when the bill comes. We also pound into our kids heads that cash is king and only use debt in rare cases, and then try to borrow as little as possible. The problem is that as more people pay cash, interest income for the banks goes down. There was just a recent article how bank fees are on the rise. Maybe it's a coincidence, maybe it's not.

In many cases the debt just doesn't die. When possible they pass it on to a spouse. If not they try pass it onto the children. They always try to get their money doesn't matter from who.

My credit is so shot that I can't even qualify for loans, and when I do the interest rate is so high that its not worth it. As a result I am a cash person.

reply to post by MrStyx


You cannot pass debt onto children.

If you parent dies, owing $10,000 and there is no spouse, there is no legal mechanism to pass that debt onto the next generation.

If you parent dies and owes $100,000 on their home loan. If the executor of the will sells the house for more then $100,000 then the home loan will be paid. If the estate is worth less than the outstanding debt, the debt does not get passed along.

reply to post by Wildbob77


In Japan they have intergenerational debt and 100-year mortgages.

I'm sure the bankers in the rest of the world are squirming with jealousy. How long will it e before the laws get changed in other places to permit that kind of travesty?