This article needs additional citations for verification. For information about loans to leveraged buyout investopedia forex, see Consumer lending. In economics, consumer debt is the amount owed by consumers, as opposed to that of businesses or governments. In macroeconomic terms, it is debt which is used to fund consumption rather than investment.
In recent years, an alternative analysis might view consumer debt as a way to increase domestic production, on the grounds that if credit is easily available, the increased demand for consumer goods should cause an increase of overall domestic production. Personal debt is on the rise, particularly in the United States and the United Kingdom. However, according to the US Federal Reserve, the US household debt service ratio is at the lowest level since its peak in the Fall of 2007. Long-term consumer debt is often considered fiscally suboptimal.
While some consumer items such as automobiles may be marketed as having high levels of utility that justify incurring short-term debt, most consumer goods are not. For example, incurring high-interest consumer debt through buying a big-screen television “now”, rather than saving for it, cannot usually be financially justified by the subjective benefits of having the television early. In many countries, the ease with which individuals can accumulate consumer debt beyond their means to repay has precipitated a growth industry in debt consolidation and credit counseling. A country’s private debt can be measured as a ‘debt to GDP ratio’, which is the total outstanding private debt of its residents divided by that nation’s annual GDP. A variant is the consumer leverage ratio, which is the ratio of debt to personal income. Household Debt Service and Financial Obligations Ratios”.
Household Debt Service and Financial Obligations Ratios. This page was last edited on 2 January 2018, at 21:36. This article needs additional citations for verification. As money became a commodity, the money market became a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. Money markets, which provide liquidity for the global financial system, and capital markets make up the financial market.
The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods, typically up to twelve months. Money market trades in short-term financial instruments commonly called “paper”. The core of the money market consists of interbank lending—banks borrowing and lending to each other using commercial paper, repurchase agreements and similar instruments. In the United States, federal, state and local governments all issue paper to meet funding needs.