MONEY MANAGEMENT TIP

"People at the high end tend to use very little debt relative to their incomes, and the debt has accumulated in recent decades at the lower end."
             David Levy

                                        
                                  

Levy is a principal in the economic firm Jerome Levy Forecasting Center in New York. His comment occurred in an interview in the recent edition of Barron's. We cite it here not so much to focus on his outlook about the US economy (He's suggesting investors need to be aware another recession could be in the offing.) as it makes an important distinction about human behavior, something politicians never seem to get.

Debt, like most things in life, doesn't come into one's balance sheet uninvited. And the idea that people are either unable or incapable of saying no to all those credit card inducements is absurd. Much of the previous debt was accumulated at higher interests rates. 

Refinancing it at lower rates as many would discover in this last recession isn't always possible. They have a name for it on the Street, liquidity crunch.  
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