Of The Problems With Monetized Debt as a Currency

                      Over the last several decades, middle class citizens in western countries have been borrowing an increasing amount of money via credit cards.  While it makes sense to use credit cards to build up your credit score and buy nessities then pay off the balance once you recieve your paycheck.  Some people end up stuck in a cycle of credit card debt and they find it challenging to get out of it.  Most credit cards are revolving accounts.  Which means that a credit card user can pay off some but not all of the balance then use the credit card more.  This feature can be a good thing when credit cards are used wisely.  It is important to note that given the high interest rate on credit cards, it is ill advised to spend much more than two hundred dollars at a time and no less than fifty dollars.  Of course the maximum amount you should spend on a credit card could vary depending on your income. 
               Car loans and morgages have been available for a almost a century.  This has led to an increase in demand for houses and automobiles.  Also, most middle class Americans are in debt.  As the cost of college rises so does the demand for student loans.  The cost of college has risen dramatically in recent years.  Currently, there is over a trillion dollars of student loan debt outstanding in the U.S.  This trend could lead to a boom in human capital or yet another financial crises.  Theoretically, these types of debt can be a good thing given that the borrowers have a steady, middle class job.  As we saw in the 2008 crash people were unable to pay their mortgage due to being laid off in the wake of the reccession.  Forclosures increased dramatically and the big banks and automobile industries had to be bailed out.  Indeed, another debt crises would be disasterous.  This is not to say that debt is always a bad thing.  However, one should be cautious when borrowing.  One way to avoid default on a loan is to have six months of income saved if possible in case of being laid off.  Also, when taking out a student loan one should avoid borrowing more than what is expected to be earned in income the first year after graduation.  In other words, a college student's student loan debt should not exceed his or her yearly income the first year after graduation. 
           Monetized debt also has implications for governments and companies.  As I've mentioned in previous blogs, countries such as the U.S, France, Spain, Italy, and Greece has all burdened themselves with public debt.  This could lead to those countries losing some sovereignty to debtors.  As we saw in the 2012 European Debt Crises, Greece did give up some sovereignty when Germany bailed out Greece on the conditions that Greece's government cut social programs and other government expenditures.  Government borrow money by issuing debt.  Greece has experimented with negative interest rate bonds.  I will explain this more in dept in a later blog.  For the last seven years Itay has had trouble getting its bonds on the market as investors grow weary of high youth unemployment and a lack of fiscal restraint.  It is important to note that the America's debt, treasury bonds, has been considered by far the safest debt in the world with the interest rates on 30 year treasury bonds floating at around three percent.  I do not agree with this assesment by Wall Street.  I think the U.S federal government will soon find it difficult to repary its debt as the total interest the federal government pays on its debt reaches one trillion dollars in the next decade.  Not to mentioned most tax paying citizens are burdened with an increasing amount of debt.  Thus, ordinary citizens will be unable to pay higher taxes to service increasing public debt. 
             In the U.S alone corporations have $6.3 trillion dollars worth of debt on its balance sheets.  As I may have mentioned before, corporations borrow money by issuing bonds available to the general public for purchase.  Also, corporations have the option of issuing shares of stock to fund expansion or research and developement.  However, these corporations have $2.1 trillion dollars in cash available to service this debt.  In the decade since the end of the 2008 recession, corporate profits have risen to record highs while incomes of middle and working class people remain relatively stagnate.  Although, recent job reports suggests that the trend of stagnate wages is reversing as wages have increased by as much as three percent in some months.  These wage increases do not include the wages of executives or other well off individuals.