Debt worries, low birth rate ring alarm bells

Two important bits of seemingly unrelated news came out last week. One got more attention than the other.

You probably heard that the birth rate in the US hit a 32-year low in 2018. There were only 3.788 million babies born, a decline of 2% from the year before.

The US is not producing enough babies to stabilize the population. And that will become a financial problem soon for this country. I’ll explain shortly.

The other bit of news has to do with credit cards: Americans are now paying the highest interest rates ever on their credit cards. The average 17% rate being charged today by banks is probably the reason consumers are suddenly spending less this spring.

And it could also be among the reasons people are having fewer kids.

Let’s assume people aren’t losing their interest in sex. Let’s also assume that people have heard that kids are expensive to raise.

Sure, there is other debt that’s not on credit cards: student loans, car payments and mortgages.

But all of those are loans that someone spent time thinking about. Credit card payments are something that creeps up on people. And the creep is made even creepier when card companies are charging usurious interest rates.

People could cut back on spending but that’s not often feasible. Or, instead, they could stop putting themselves in the position where they will inevitably have to spend more for two decades: They can stop having kids.

I’m not saying that a lower credit card rate will create a population boom. But without credit card debt, the population might not bust as quickly.

I’m also wondering why credit card companies see fit to gouge when bank profits are high; when they are paying savers so little; when the economy is doing well, and when borrowing costs in other segments of the economy are still low.

This is my long way of saying that banks should stop being greedy. Bankers like to portray themselves as looking out for the public good. Some heads of major banks even go out of their way to preach about how to make our country and the world a better place.

Well, I think they can start by cutting their outrageous interest rates on credit cards. Maybe then people will be able to afford to have more babies.

And if you really don’t care about America’s declining birth rate, consider this: Unless people start having more babies, then Social Security, which is nothing more than a pyramid scheme where more people have to pay into the system than get payments, will topple.

Then you aren’t going to be able to retire comfortable.

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