During a conversation with one of my coworker, there was a frightening realization concerning taxes, and why I think the future consumer is pretty much doomed in a lot of ways.  When you put everything together, it really makes a lot of sense that huge debt is becoming more and more prevalent.  First, a few facts.

1. A lot of companies give their employees 3-5 percent raises per year.
2. The average rate of inflation per year is 5 to 6 percent.
3. The average amount of tax on the dollar steady increases
4. The price of consumer goods increases every year with inflation
5. The average American is $8000+ dollars in debt. And I don’t think that includes the house or the car.  Definitely not the house
6. Credit card companies are finding more and more ways to get money out of the consumer.  (Multiple billing cycles per month, etc…)
7. Banks are finding more and more ways to get fees and penalties out of consumers.
8. We are constantly being barraged by an onslaught of instant gratification and the latest and greatest of consumer products.

There are more to list, but I’ll stop there as far as the facts are concerned.  Items 1-4 go pretty much hand in hand to screw the consumer over.  Why’s that you ask? Here’s why!  With the consumer’s average raise being between 3 and 5 percent, the average salary is not keeping up with inflation.  For those that think the rate of inflation isn’t as high as 5 or 6 percent, or who are looking at the government statistics, take note that there are some items in there that are purposely taken out in order to make the numbers lower.

To add to that, the tax on the dollar has been increasing throughout the years.  Not at an alarming rate,  but at the same time, it’s never lowered either.  Couple that with the fact that the cost consumer goods rise with inflation, which of course will take more of your money to purchase.   So the amount of dollars that you’re spending is increasing, and the amount of tax you pay per dollar has increased as well.  So technically, Uncle Sam gets to double dip.   I can’t take credit for pointing that out however.  That credit goes to my coworker Robert.

Banks, credit card companies, etc…  I can’t stand these companies.  Advertising that they are out there to help the consumer.  To reduce debt, to have lower fee’s etc… yet they are the main ones screwing the consumer over.   Banks offer to help you save money, but how?  They offer you 2-5 percent on your money in a savings account, yet the rate of inflation is 5-6 percent.   They turn your money around and loan it out on high interest credit cards, or place it into securities, where they earn an average of 10% or more in stocks.   When I learned the principles of banking at Jack Henry, I found out that a bank has the majority of it’s assets in securities.  70% if I remember right.   Here’s another thing to think about.  If the consumer did not have debt, would the bank be in business? Absolutely not.  And that’s why they do the things they do and sell the things they sell.  TO CREATE DEBT!

And credit card companies.  Wow! Just wow!  I’m not going to go too much into it, but do some research on the different types of billing cycles, (average daily balance, two cycle billing, etc..) and you will realize just how much your interest rate REALLY is.