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mybudget360.com / by mybudget360 / September 16, 2015
Low interest rates create an environment that encourages debt based spending. In regards to monetary policy, this is how you grease the wheels to get the economic engine spinning. As part of your financial arsenal this can be used in moderation but the Fed has been using maximum credit leverage since the economy imploded and this short-term fix is now running into its seventh year. The outcomes are expected with inflation running rampant in credit heavy items like housing, cars, and college tuition. But with housing, big banks and investors have crowded out regular buyers thus pushing the homeownership rate lower. So credit based spending has been in full effect with auto loans and student debt. As many credit worthy Americans were deep in debt, the temptation to go into subprime loans has accelerated dramatically. Subprime auto debt is running rampant. Student debt is now the most delinquent debt class in America. Subprime debt is once again super charging the debt fueled market.
Subprime debt is back in a big way
Over the last seven years courtesy of the Fed’s low rate policies, auto and student debt has surged in dramatic fashion. While the shrinking middle class is unable to purchase homes with inflated values, many are still chasing the dream by going into debt for cars and college.
The post How subprime loans keep the bubble going: Subprime auto loans continue to grow as credit worthy customers drop out of the market. appeared first on Silver For The People.
