Proverbs 22:7  “The rich rule over the poor, and the borrower is slave to the lender.”

We can now include America’s household credit card debt in the same trillion-dollar category as America’s overall debt. The Federal Reserve Bank of New York released their findings in August that, at the end of the second quarter this year, credit card debt was at $1.03 trillion ($1,030,000,000,000).

As inflation rises, interest rates are at a 22-year high. Guess what credit card companies do as interest rates rise? They increase the rates they charge when you borrow on your card. Which, of course, sinks you farther into debt. As this week’s verse declares, you become a slave to that credit card company.

The sad truth is we are only talking about credit cards, which is one of several components making up overall household debt where there is no collateral, no “surety,” behind them (i.e., there is not anything you can pledge as security to repay that loan if you should default). Now, you are truly a slave to your debt.

Two of the other massive components in household debt where there is little to no collateral are auto loans and student loans. When we add in credit cards, America’s overall household debt is at a staggering $17.06 trillion. What is behind today’s massive increase in both credit card and overall household debt?

As long as inflation stays above the Federal Reserve’s 2% target, and it has ever since President Biden took office, households are spending more money for less goods and services.

Biden became President on January 20, 2021. Until then, under President Donald Trump, the Federal Reserve interest rate was near zero. By March 2021, the Fed began quickly raising interest rates. Now, 30 months later in September 2023, rates are close to 5.50%, the highest they have been in over 20 years.

That allows credit card companies to charge higher interest rates. The St. Louis branch of the Federal Reserve reports credit card interest rates are over 20%, the highest since the Fed began tracking them in 1994. So, if you owe $10,000 on a card, over the course of a year you are accumulating $2,000 more on that card in just interest! This is what God means when He says, “The borrower is slave to the lender.”

We are under an administration that, unlike the previous one, is incompetent to curb inflation. But, in addition to debt, we are also suffering from lost wages. What do I mean by lost wages?

In September 2022, The New York Post gave this report on the economic conditions in America: “The average American has lost $4,200 in annual income since President Biden took office – entirely wiping out gains made under the Trump administration, an analysis from the Heritage Foundation shows.

The losses come down to surging inflation and higher interest rates. Their analysis found that the average American has lost about $3,000 in annual purchasing power because consumer prices, which have risen 12.7% since January 2021, have spiked significantly faster than wages.

Wages have risen just 8% over the same period, which has resulted in a pay cut for Americans struggling to pay for daily necessities including food, gas and rent. Higher interest rates and borrowing costs have also reduced the average person’s purchasing power by another $1,200, according to the report.”

Here we are – one year later in September 2023. After 30 months in office, the Biden administration has presided over an inflation rate that exceeds all elected presidents in US history. His supply chain debacle, shutdown of American oil production, lockdown on businesses during COVID, huge spending with no budget tightening, have driven inflation to a level that has many families using credit cards for basics.

On top of credit card debt, the surge in August in the cost of gasoline, another example of “lost wages,” means Americans need more money to purchase the same amount of gas to get to work.

Lucia Mutikani of Reuters reported on September 12 that “Gasoline prices accelerated in August, peaking at $3.984 per gallon in the third week of the month, according to data from the U.S. Energy Information Administration. That compared to $3.676 per gallon during the same period in July.” If Americans do not have much savings, they are back to their credit cards to buy the gas they need – and more debt.

God’s principles in His Bible are timeless and wise. Once we allow government to manage us, instead of we the American people managing them, we become their slaves – something to remember in 2024.

“The Evidence of Faith’s Substance” _ Article #571