Record-high consumer debt belies the Biden administrations claims to have tamed inflation, two market experts say.
The Federal Reserve Bank of New York reported this week that the sum of all US citizens credit card debts had topped $1 trillion for the first time in history.
Aquiles Larrea told Sputnik that Americans were "spending more money at a time where interest rates have gone up, thereby by default, the credit card interest rates go up as well."
"If you take a look on your credit card statements or just go to the website, you can see it's anywhere between 33 to 40 percent per annual yield on the credit card interest rates, if you're not paying them all off," Larrea said.
The finance expert said the spike in credit card debt was a delayed result of the peak in inflation in mid-2022, following the Biden administration's decision to impose sanctions on Russia over its de-Nazification operation in Ukraine.
"Although we have seen that inflation is somewhat stabilizing right now, this is after the fact where we saw inflation above nine percent at one particular point this time a year ago," Larrea said. "The damage is done. People are having to go into their credit cards, spend more money, and it is not something that bodes well for the country."
He explained that ordinary people don't feel the effects of a headline inflation rate until months later.
"Inflation isn't something that comes and knocks on the door," Larrea said. "Most people didn't start feeling the effects so roughly about four to eight months afterwards. It's not an immediate thing that you feel and you say to yourself, oh, my gosh, what do I do? It is something that you see, at the pump. You may see it initially in the grocery store, as you see it, probably three or four months afterwards."
Todd 'Bubba' Horwitz told Sputnik that he took issue with Vice-President Kamala Harris claim that inflation had been falling steadily for the past 12 months.
"I'm saying she's ignorant. I say she has no clue. I mean, let's let's be honest, American households are spending 20 per cent more this year than they were last year," Horwitz said. "Let's not try to sugarcoat that."
"The trillion dollars is not the number to talk about. The true number to talk about is the amount of people that are at their max credit card debt," Horwitz explained. "Obviously inflation creates higher debt numbers, but how many people are at their maximum of credit card debt and how many people are going to paying usury rates when they have to pay the interest on these things?"
The wealth manager stressed that even declaring personal bankruptcy was no escape from the vicious circle of debt, since "the credit card lobby got that dropped out of bankruptcy laws years ago."
"But of course, if you listen to President Biden or Vice President Harris, everything is great. We couldn't be better," Horwitz noted. "Of course, if you look in the streets and where I'm in Las Vegas right now, you can see more homeless than you've ever seen before."
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