In a recent post for the Sound Dollar Campaign I pointed out how the Federal Reserve of New York had to adjust their numbers on the size of U.S. student-loan debt. And it wouldn’t have been a big deal, except for the fact they adjusted the numbers upward by a whopping $295 billion, or 53.7%!
Now before I start pointing a finger at the Fed and the government for their money-printing and spendthrift ways, I saw an infographic on the student loan debt that got me thinking. When did we — Americans — learn it’s OK to live beyond our means?
Perhaps it was an outgrowth of the late ’50s and early ’60s when universal credit cards started hitting the market. Much of the marketing around these cards was build on a “spend now, pay later” theme.
But for the sake of argument, let’s not look at “when” from the perspective of a day or date. A historical day or date may give us a starting line, but that has less to do with what we are experiencing right now … in this generation. Let’s look at “when” from a developmental standpoint.
The “spend now pay later” mentality seems to have been with us for several generations. The Baby Boom generation has never really been known as savers. And neither has Generation X … my generation.
Heck, the president is a Generation X-er. And he likely learned to spend just like the rest of us. So it shouldn’t be a surprise that the spend-now-pay-later mentality is permeating the halls of Washington.
But here’s the real scary part — we’re teaching Generation Y (the Millennials) to do the same thing. We are just perpetuating a “spend now, pay later” mindset from one generation to the next.
Take a look at the Higher Education Bubble infographic below. And pay special attention to the realizations the homebuyer (Generation X) and the student (Generation Y) have as they go through the three stages of a bubble.
In their mind, a “spend now and pay later” stance is justifiable … at least at the outset. And all is well until the bubble bursts.
Candidly, the Federal Reserve and our nation’s Congress have the same kind of thinking. But the “pay later” is finally the “pay now.” And unless we take drastic action to reduce our dependence on debt … the next “pay later” will be too much for any generation to bear.
Original post at the Campaign for a Sound Dollar.