Americans' debt shrinks - 1st time ever

[DeepModem Mom]

Source: CNNMoney

In a sign that Americans' spending habits are shifting, household debt fell for the first time ever, based on data going back to 1952.

According to a Federal Reserve report released Thursday, consumer debt fell an annualized $30 billion, or 0.8% in the third quarter to $13.91 trillion.

Americans saw their net worth decline by $2.8 trillion, or 4.7%, in the third quarter, dragged down by precipitous declines in home values and the stock market.

The net worth of U.S. households fell to $56.5 trillion at the end of September, according to the Federal Reserve's flow of funds report, which was released Thursday.

Home values declined by $347 billion in the quarter to $19.1 trillion. The net value of stock holdings for households fell $921.8 billion to $7.3 trillion.

Read more: http://money.cnn.com/2008/12/11/news/economy/flow_of_funds/index.htm

[Bok_Tukalo]

1. I think we have run out of purchasers of our debt

<OPE>

[ben_meyers]

2. You think wrong

The Associated Press reports ….

The Treasury Department said Tuesday it had sold $30 billion in four-week bills at an interest rate of zero percent, the first time that’s happened since the government began issuing the notes in 2001. And when investors traded their T-bills with each other, the yield sometimes went negative.

Not only did "they" buy our debt, they got zero return.

[Bok_Tukalo]

3. I was thinking consumer debt

I misunderstood the OP and did not realize it was about government instruments.

[Ganja Ninja]

4. Could bankruptcy and loan defaults be the reason?

I think once they give up on ever getting repaid the debt is written off and and you're no longer in debt.

[closeupready]

5. Both bankruptcy filings and loan defaults are WAY up,

but I'm not sure, in the aggregate, that they account for a sufficient dollar amount to impact a national debt total.

[jwirr]

6. Yeah when you foreclose on your house you have a lot less debt

but you are homeless. It is good to get rid of debt but if it happens in the wrong way it is not a plus.

[Political_Junkie]

7. Yep, Jwirr

that's how it happens. I'm debt free! Woohoo...

[shanti]

8. did my part

last cc paid off this month. only have car note (paid off next may) and mortgage and woohoo! downsizing bigtime for retirement in a couple.

[texastoast]

9. Hmm. Pay as you go.

We heard that from a fine fellow in the 2004 presidential race.

And I heard if from my parents too--save then spend. It works to keep away the corporatists who would take our money.

[Hannah Bell]

10. are you going to save your $ in a bank? if so, the corporatists have the use of it.

in a credit union? check carefully, many are run by corporations (e.g. weyerhaueser's employee credit union) - & they get to use your $.

unless you bury it in the yard, most savings options entail corporatists using your money.