According to US debt stats, the four key areas of debt in the US are mortgages, auto loans, student loans, and credit card debts. Money owed for purchasing homes makes up a considerable part in the financial crisis that Americans are facing today.
One primary driver of the US debt is its aging population. More people are becoming eligible for Medicare or Medicaid and the working group, who are actually paying for this healthcare support, cannot keep up with the demand. The aggregate income of current professionals won't be enough to cover the bill, so the government has to use borrowed money from other sources to fulfill this need.
At a personal level, borrowing a little money from financial institutions like banks and lenders is not a significant problem since it can actually help your credit rating. However, when you look at it a grander scale, like the government's debt, it can lead to problems for its citizens.
Here are the effects of the debt problem that you may be experiencing now:
1. Ever-Increasing Interest Rates
Now that the government's debt has exceeded the tipping point, you may notice interest rates rising for almost all industries. As mentioned above, federal debt is owed to businesses, foreign entities, and private financial institutions. If they see that the US is no longer capable of paying back the borrowed money, it's highly likely that they'd demand larger interest payments as compensation for the risks.
This scenario reduces the value of the country's currency. The irony of it all is that, as the nation's fiat money plummets, repayments have lower worth and lead to high-interest rates. Plus, the prices of imports increase and contribute to inflation.
2. Weak Job Markets
The US government's substantial national debt implies that there is little economic growth. This is because the funds aren't being used to create jobs, especially on road construction projects and small business loans.
If you've had to apply for a new position recently, you may have faced the effects of a weak job market through the intense competition. Hundreds of candidates apply for a single role, which leads to human resource managers implementing more stringent hiring processes.
3. Raised Taxes
When worse comes to worst, and the government can't find other ways to produce money to repay the debt, they have no choice but to increase the taxes imposed on ordinary citizens. Moreover, raising the collection amount for consumers and property owners may continue to rise as inflation continues.
Conclusion
The US is having a massive debt crisis right now. This poses a problem for young Americans because they have to pay for the medical support of the aging population, which has a higher life expectancy than previous generations. The effects are visible through high-interest rates, weak job markets, and the impending possibility of increased taxes to repay consumer and national debt.