Folks, this economy is getting so bad they can't even ignore it anymore. New data just out shows the American Consumer is drowning in debt and can't breathe On top of that, Yet another indicator suggests a 99.3 percent chance of a rapid economic collapse just over the horizon. And on top of all that, U.S debt servicing costs are getting so expensive that we now pay more for servicing our national debt than we do for the entire military. We've got so much to talk about today, your head is going to literally spin off and of course you cannot Sue Zip Trader If it does, we will not be held liable I am just the messenger and we're going to get into all of this in just a moment.

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We are seeing that debt Skyrocket to levels never ever, ever seen before in this country or anywhere in the world. Even on Mars, they don't have debt this High and the Martians. They like to live pretty high off the hog. but the American Consumer today has more credit card debt than at any point in history.

Of course that makes sense Charlie Because prices are higher than ever in history, Sure, but that doesn't tell the whole story. You see, credit card debt is up about 20 percent year over year, yet the CPI is registering only 4.9 percent year over year. Which means either the CPI is lying or the American Consumer can't afford to live anymore or a combination of both. I Think it's both.

Listen to this: credit card balances stay near or at record highs. According to various reports, TransUnion recorded nearly 20 year-over-year growth in credit card balance is, while the NY Fed report put the annual increase at 18 percent. Both have total outstanding balances just below 1 trillion at the end of the first quarter. Meanwhile, balances on unsecured personal loans hit a record high of 225 billion according to TransUnion up 26.3 percent from the same period last year.

So is it sustainable for credit cards and personal loans to be up 20 year over year on average? Is that sustainable? And why is this happening? First of all, in terms of sustainability? hell no, that is not sustainable at all. I Guess it depends on your definition of sustainable. If your definition of sustainable is like death spiral, then sure, it's very, very sustainable. But why is this happening? Well, if you ask the politicians and people in charge who have helped cause this crisis, well, they say this is really, really good.

This is happening because the economy is so strong that people feel so good about their future that they're buying more stuff now thinking that they'll be able to pay for it later. Everybody's out there spending and splurging because they're just so optimistic. That's what the public politicians say. However, of course we know that if that was true, you wouldn't see corporate profits coming in consistently lower and lower.

and you wouldn't see Corporation after Corporation guiding down lower and lower. Where's all the extra spending and profits that should come from all this extra borrowing? Well, the truth is that right now people aren't borrowing money on credit cards. at least not net because they want to splurge because they're so optimistic about the future. But they're doing it because they have no other choice.

That's certainly not everybody yet, but it's certainly growing. It's a growing percentage of people, and if things were so good, you wouldn't see the delinquency rate on these credit cards start picking up consistently. And yet we are seeing that the delinquency transition rate for credit cards, the share of credit card debt that is 30 days or more past due increased during the first three months of the year according to a Federal Reserve Bank of New York report released Monday that's approaching pre-pandemic levels. So what is causing this massive inconsistent increase in debt year over year and the ever-growing delinquencies? Again, it's pretty obvious it's because people can't afford to live anymore, The economy can't support them and what they were already making can't support the higher prices that are still very much baked into the system and aren't going really anywhere.

Why are consumers on the side of the street dying like animals right now? Well, the reason is because we had record inflation and then we had 10 consecutive rate hikes that each and every day managed to break something else in our economy. And remember folks, you got to read between the lines here when you have record levels of Consumer Debt Like this: remember that these are some of the highest interest rate debt that a consumer can possibly have. You are seeing average interest at this at levels like 20 to 27 percent. APR The average you were paying back in 2015 was at about 12.08 percent.

In 2020, that was about 14.73 Now you're paying 20 to 27 percent, averaging somewhere around 20 25 depending on where you look at the data. So if you are someone that is carrying a lot of credit card debt which unfortunately is most people these days, well not only is that a huge burden and a huge headache, but it's increasingly taken over more and more of your household income. So that means even if you don't get let go, if you don't get laid off and you keep your same level of income, well, less and less of that income is going to be available for things that you actually need to live. It's going to be spent on things like debt servicing.

And what happens is as the economy contracts and as debt servicing costs take up more of your household income, well, all of a sudden you're gonna have to borrow more and more money just to stay alive, which will continue to roll over at rates that are higher and higher and higher. And so basically you're in this Doom Loop where you're just drowning in death, debt, and destruction forever. And you can already see this loud and clear as we look at these delinquencies that are starting to pile up rapidly and watch as you head into the end of the year. You're going to see delinquencies go like now.

Obviously, politicians believe this is a good thing. These things mean that the economy is strong Janet Yellen angry Bingo Grandma Who? I guess I Can't really call a politician, but I'd argue she's not really a treasury secretary either. at least not a good good one. Well, she said this last month, the U.S economy is obviously performing exceptionally well with continued solid job creation, inflation gradually moving down, robust consumer spending.

She said I'm not anticipating a downturn in the economy, so let me ask you this question when you hear what our angry Bingo grandma is saying and then you look at the economy: Record: Bank Collapses manufacturing contraction, unprecedented layoffs in the tech sector retail store after retail store collapse Record: Credit card debt, credit default rates that are consistently climbing well. Do all of those put together suggest that we're in a very, very strong economy that is so obviously strong? Well, I don't know, folks, You let me know in the comment section down below. Janet you got Bingo What? I Thought this was Jenga But don't you worry because now things are so peachy that yet another recession indicator suggests a 99.3 percent chance of an economic reversal reversal. meaning down massively Massiva apocalypso I Don't like the way that market watch.

Word of this, because I'd argue already. In a pretty bad recession, the trend is pretty damning, But hey, here's what they said: Many economists, as well as Market implied gauges are saying that the US is likely to enter a recession, but there's one gauge that's about as high as it could possibly be. The model uses the difference between the three-month forward treasury rate beginning 18 months ahead and the three-month treasury bill to estimate the probability of a recession in the United States 12 months ahead. And here's what that looks like on a lovely chart: 99.3 Chance of a recession.

This chart looks pretty damn ugly. and I know what you're thinking Charlie Charlie Please stop being so pessimistic Charlie Please just look at the glass as being 0.7 percent full versus being 99.3 percent empty. You're such a pessimist I Just hate that about you Charlie Stop being a dirty little fear-monger Charlie Charlie My goal on this planet is to do just two things. It is to truthmonger and it is to Charlie Monger not Charlie Monger but Charlie Monger which is one of my favorite dances at the club Who.

But anyways, back on track here. There have only been a few times when the indicator was in excess of 99 way back in the 1970s and in the early 1980s and recessions did follow. This time around is very, very similar to that era in a lot of different ways. Whether we're talking inflation and monetary policy switches and and overall aggressiveness and obviously a lot of the recession data is very similar as well.

And you go over to the debt ceiling situation, which is a story that I haven't had a lot of patience for, which is why we haven't talked about it a lot on this channel, but it's a very, very big deal. Essentially, you have the Democrats that are like we want to spend way more than the country takes in in taxes and you have the Republicans that are also like we want to spend way more than the country takes it in taxes but slightly less than the Democrats And they're fighting this all out day after day after day. And they're like if we don't get what we want, everything that we want, well, we're going to destroy the entire Financial system. That's essentially in a nutshell, what is going on here, and markets of course, have been a little bit skittish back and forth as this whole battle has played out.

A lot of people have doubted that this would default, but there's always that chance, right? and Reuters reports the U.S Treasury has said it could start running out of funds as early as June 1st to pay the government's bills. A move Economist sphere will trigger a session, but then you had some Tom Dick and Harry politicians coming out and saying oh, don't worry, we're going to have a resolution to this blah blah blah blah blah blah and stocks went up a little bit, but still behind the scenes. The cost, the cost to insure against a U.S debt default continues to Skyrocket as a lot of companies would be belly up within seconds if the debt defaulted. So they're like, okay, I'm not going to take that risk of complete institutional collapse, so we're going to go ahead and buy some insurance.

The irony is that the insurance might not even be enough to cover them. It has never been tested on this kind of scale, right? We've never defaulted. But fun fact: The US now spends more money on servicing its debt than it does on National Defense You can see this debt servicing cost line pick up pretty damn dramatically as the FED has gone on its apocalypse inducing monetary policy. Roller coaster.

Zero Hedge Reports estimated annualized debt servicing costs are about 90 percent higher than they were back in 2011. this is partially due to an exploding dead pile, but also due to a significant shift higher in U.S yields 90 percent higher, 90 percent higher for debt servicing costs. What a disaster! Not to mention the debt is much bigger than it was just five or ten years ago, just three or four years ago just servicing the debt. The interest payments paying the interest payments on our country's outstanding debt now costs about 813 billion dollars.

You look up government spending for 2022, the government spent about 1.22 trillion on Social Security 914 billion on health, 865 billion on income security, and then 767 billion on National Defense 755 billion on Medicare 677 billion on education. So if we are spending around 800 billion on just interest payments, Well, that means that the interest on the debt now is dwarfing some of the other items that forced us to take out this debt in the first place. and it's almost going to replace the two biggest line items. And so this is a very, very important point to understand when you're looking at these debt ceiling discussions right now.

we're talking about how much further we're going to dig ourselves into this hole. It's already a ridiculous hole. Both parties want to expand spending in many different areas. one just wants to do it less than the other one.

and nobody's really talking about how we can reverse this overall crisis. And obviously, voters will never want to vote for somebody that can reverse the crisis because they're not going to be promised as many goodies. I Mean it's really quite a disaster. And remember what happens if the US does default if we don't raise the debt ceiling? Well, all those treasuries that people have been pouring into and Banks hold their reserves in.

Oh yeah, those aren't going to get paid out. So essentially you're damned if you do, and you're damned if you don't. Oof, what a great time we're in. But Charlie can you please tell us some good news? Well, according to Bloomberg, if you want to be in the top one percent these days, in the US, you got to be worth about 5.1 million dollars net worth, assets minus liabilities.

But here's a life hack that could be very, very useful. You see, if you want to be in the top one percent and you're not in the 5.1 million dollar range yet, well, you could try moving to the Philippines or Kenya. In the Philippines you only need a 57 000 net worth in Kenya though you only need a twenty thousand dollar net worth so that my might be an interesting life hack for it. Just don't move to Monaco though because you need about 12 million bucks there.

although hey, at least they don't have personal income taxes. Anyways, folks that caps off today's video I Hope you found value in our coverage and you're being informed on these issues because these issues are so so important because we're going to have some of the best opportunities to take advantage of the volatility in this market environment. of some of the dip Buys in this market environment as we go through this on and off fiscal and monetary crisis which is probably going to be a joyride that we're going to be on for many, many, many years. and you want to make sure that you're doing your best to stay informed on all this right and we'll do our part to bring you all the latest information.

Have a good one folks we'll see in the next video.