American credit card debt ballooned rapidly in the 90s and early to mid-2000s leaving many families with total combined balances in excess of $10,000. Some used the easy credit irresponsibly, racking up $50,000+ in consumer debt (not even counting car debts).

Then, in the fall of 2007, signs of weakness in the housing market — and the economy in general — began to appear. By the fall of 2008, the entire economy seemed to be falling apart.

All of a sudden, Americans were struggling to repay their credit card debt. They were even struggling to pay their mortgages.

One commenter on Digg suggested that credit card debt wasn’t the problem, but rather that irresponsible Americans were the problem.

Yes, I laughed. On the surface, it’s easy to agree with. Irresponsible people get what they deserve, right?

But the issue is actually much more complicated because the dollar is a debt-based currency. It is not real money. Every dollar in circulation is actually owed to the Federal Reserve — with interest!

In other words, our entire economy is based on debt.

Credit Card Debt Is Inevitable

The way the American economic system works, credit card debt — and, indeed, all forms of debt — is inevitable. Because the only way the economy stays healthy is if the money supply is expanding.

And the ONLY way new money is created is through debt.

This may be hard to believe. And since I don’t have space in this article to explain how this works, I will simply point you to G. Edward Griffin’s masterpiece, The Creature from Jekyll Island.

In America, every dollar magically turns into 10 dollars, maybe more, all through the dubious practice of fractional banking.

American Blindness

Most Americans don’t really understand how our money system works. They are blind. As a result, they hack at the branches instead of striking the root.

The branches are things like credit cards, irresponsible behavior, etc. These are not the real issue. The root is our debt-based money system. This is what is hurting us.

Right now, Americans are paying off debt faster than they ever have before. They’re tightening their belts, cutting back, using extra money to reduce debts. They are borrowing less.

This is all good. All things being equal, having no debt is better than being in debt. So I commend any person or family that is fighting the good fight (so to speak).

But until our money system gets a complete overhaul (including real money), then Americans will continue to bear the burden of oppressive credit card debt.