Debt has become an integral part of our daily lives, with many of us relying on it to make significant purchases. However, unpaid debt can have severe consequences for both individuals and the economy as a whole. This has been a challenge for government officials, who have implemented various initiatives to address the issue. President Joe Biden’s attempt to forgive student loan debt and two Michigan counties’ plan to eliminate medical debt for over 300,000 residents are just a few examples of such efforts.
The debate around eliminating debt continues, with economist Richard Vague advocating for it as a natural solution. Vague recently discussed this topic on Created Equal, shedding light on how debt functions and who benefits from it most. He points out that lower-income individuals tend to carry a higher proportion of debt compared to their income than higher-income groups. Over the past few decades, debt-to-income ratios have remained relatively stable for higher-income groups but have skyrocketed by 75 to 80% for those in lower income brackets. This disproportionate debt burden on lower-income individuals makes it challenging for them to accumulate wealth or meet everyday expenses.
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