YesYou are probably already feeling the pressure. Gas prices are rising. Food prices are rising. And some products are getting harder and harder to find. The money you allocated for food and gasoline a month ago is no longer enough. The extras we’ve enjoyed for so long, like subscriptions to websites and streaming services, need to be cut from the budget. Summer road trips should be cancelled. Putting your kids into extracurricular activities might be impossible in a few months. This is the reality we all have to face as the cost of living continues to rise.
“Wages are up but consumers are worse off,” SchiffGold wrote. “The average hourly wage has increased by 5.5% over the past year. But taking into account rising costs, real revenues fell 2.6%. The U.S. Producer Price Index and Consumer Price Index are at record highs, posting double-digit year-over-year increases. Diesel costs are also at record highs and supply is at a 17-year low, which will continue to drive up the costs of goods and services. The value of people’s income and savings erodes month after month before they have a chance to spend it. The outlook is quite bleak for the future.
How are people dealing with this historic cost of living crisis? Credit card.
“Consumer debt continues to escalate at a staggering rate,” continued SchiffGold. “Total consumer debt rose by $52.4 billion in March, an increase of 14% according to the latest data released by the Federal Reserve. Outstanding consumer debt now stands at 4.54 trillion. Consumer debt is calculated by adding together credit card debt, student loans, and auto loans. If mortgage debt is included, that puts US consumer debt at $15.8 trillion. For put that into perspective, China’s annual gross domestic product in 2020 was $14.7 trillion, and the United States gdp was $20.9 trillion.
“With stimulus money long gone and savings depleted, Americans have clearly turned to credit cards to keep up with rapidly rising prices,” SchiffGold wrote. “Revolving credit, primarily reflecting credit card debt, increased 35.3% in March. American consumers added $31.4 billion to their credit card bills in a single month. The data also shows that Americans opened 229 million new credit cards in the first quarter of 2022.
We live in an age of cheap debt. With interest rates so low for so long, mortgages and credit card debt seemed more attractive. People used stimulus checks to pay off debt; free money offered an illusion of stability. Now that interest rates are likely to reach historic highs, the illusion is about to crumble, as SchiffGold pointed out: “With rising interest rates, Americans will soon be paying more interest each month, and many will see minimum payments increase. Average annual percentage rates (apr) currently stand at just over 16%. Analysts say it could well top 18% by the end of the year, breaking the record of 17.87% set in April 2019.”
As prices rise, the stock market is taking a hit, with more than $7 trillion lost in the past two weeks with values plummeting. As this instability increases, Americans are also hoarding money. Bank of America reported that its customers have the most cash since the September 11, 2001, terrorist attacks.
In Canada, True North reports that 50% of Canadians are within $200 of insolvency. Another 31% said they had difficulty paying their bills. “Statistics Canada says the household debt-to-disposable income ratio hit a record high in the fourth quarter as mortgage borrowing increased and disposable income fell,” said ctv News. The agency reports on a seasonally adjusted basis that household credit market debt as a share of household disposable income rose to 186.2% in the fourth quarter, from a revised reading of 180.4% for the third quarter. The reading means there was $1.86 of credit market debt for every dollar of disposable household income.
Most people were already living in debt before the cost of living crisis hit our countries. Now people who are already in debt are using credit cards just to survive. What happens when credit cards run out and debt collectors arrive? This self-inflicted cost of living crisis is crushing people. This makes people more dependent on government programs. It becomes an insurmountable obstacle for small businesses and entrepreneurs. Perhaps worst of all, debt destroys families.
the Trumpet has warned for years that debt is a major curse for the individual and for a nation. The Bible identified debt as one of the national curses that would afflict the end-time nations of Israel if they disobeyed God’s law. You can prove it for yourself by reading the book by the late Herbert W. Armstrong The United States and Britain According to Prophecy. Deuteronomy 28:44 says, “He [the stranger] lend you, and you shall not lend to him: he shall be the head, and you shall be the tail. The more the Israelite nations get into debt, the more they become the “tail” in the balance of power. The same is true at the individual level: the more debt an individual has, the less control they have over their life.
There have been years of warning that curses would consume our nations. Now these curses are impacting our lives, and there is no way to avoid them. Yet, all of these curses are meant to cause people to repent, turn away from sins and curses, and move toward the path of abundant blessings. Mr. Armstrong wrote in The United States and Britain According to Prophecy:
And today God warns us, through many prophecies in Jeremiah, Ezekiel, Isaiah, Micah and many others, that unless we of this generation repent of our sins and turn to Him through fasting, tears and fervent prayer, He will destroy our cities, all our fortresses, with the foreign sword; that he will punish us with the hand of a cruel one; that we will be invaded, conquered, reduced to slavery! May God help us to heed this warning!
One of the ways we need to repent is how we manage our finances. God outlines laws and principles to follow that will lead to prosperity and peace of mind, even when the world is facing financial turbulence. You might be facing financial difficulties, mired in debt. But there is a way forward. To learn how to achieve abundant life, please read our booklet Solve your money problems! and our article “Prepare to reduce your standard of living”.