Over the last 10 years we have seen a huge rise in consumer debt in the United States. After September 11 the US appeared to be heading back into a recession and the president said that for our nation to heal in this terrible time we need to spend money. Surely after that the government put pressure on the banks to lend recklessly on stated income. The old joke was if you could fog a mirror the mortgage broker could get you a loan. This drove the real estate market to record highs nationwide. People didn’t only by their own dream home that they couldn’t afford, they bought a vacation home and a few investment homes. Many people were flipping houses as the market was driven up on this debt fueled fake prosperity. In 2007, the derivatives market fractured and the entire economy and banking system almost collapsed. The government who was partly at blame for the entire situation happening pumped $1 trillion into the economy and said disaster averted. The problem was that the money went to the banks, insurance companies, and investment houses that fueled this collapse by their crazed derivatives trading. Who got hit the worst were the small businesses that didn’t get any stimulus money and the individuals that lost their jobs and had to file bankruptcy.In the years to come, this unsustainable debt reared its head as most Americans could no longer afford to pay for a home that was worth half as much as they owed on it and hence they lost to foreclosure. Following the foreclosure to eliminate the liability caused by the legal process most of the same folks ended up filing bankruptcy also. The bankruptcy filing numbers continued to rise to a peak at the end of 2010 and in 2011 the US saw a decline making government officials clang the symbols stating the end of the recession is here. In 2012 the US saw another decline in the number of Americans filing for bankruptcy but there are many other numbers that are suspicious to claim that things are getting better. This last week the GDP number came out in the US had a.1% decline in GDP lower than the predicted 1.5 % increase. It’s really no surprise to see our GDP declining as many manufacturing businesses have moved overseas or just close the doors because they could no longer compete with the Chinese. When NAFTA was created the US had a trade surplus of $1.6 billion a year with Mexico and at the end of 2010 we saw a Mexican trade deficit of $61.6 billion. When it comes to China there is a deficit of 4 to 1 of what we spend on their products compared to what they buy from us. Unemployment numbers are now creeping up again with a suspicious 7.9% currently.The optimistic American that is trying to hang on to their fake prosperity is only able to continue doing so by acquiring more debt. If people are wondering Why the number of Americans filing bankruptcy has declined since 2010, I don’t believe it’s because the economy is returning but more that banks are once again taking larger risks loaning to individuals that are already buried in debt. When the Fed introduced quantitative easing, they fired up the printing presses and started sending out money to the banks to start lending again. This creates a huge problem for the economy down the road because there is nothing backing this funny money. At the end of 2012, a study came out showing that middle-class Americans four years ago had an income to debt ratio of 50% and now the number has gone up 154%. Where these people are normally filing bankruptcy, they are now able to borrow more money and rob Peter to pay Paul. For the naysayers, just like in 2007, as these bubbles are being created it’s just a matter of time before the whole thing comes crashing down. It didn’t work for the Weimar Republic back in the 1920s and it won’t work for the US in 2013. No one can put a date and time on how this thing will play out, but one thing we can all do is try to get back to debt free lifestyle and make sure our own financial house is in order even if it means filing bankruptcy.