Americans continued to lighten their debt load in May

Total consumer credit fell 4.5% in May, with so-called revolving debt — credit cards — falling a steep 10.5%, or $7.32 billion. Auto, personal and student loans (known as non-revolving) fell 1.4%, or $1.82 billion. That combined $9.1 billion drop was about 4.5 times larger than what economists surveyed ahead of time by Dow Jones and Thompson Reuters had forecast.

Consumption, much of it debt based, accounts for more than 70% of US GDP (national income). The continued drop in total consumer credit suggests that the current recovery is weak and more stimulus from the public sector is coming. The later point brings me to the following observation made by Margaret Thatcher, in a television interview for Thames TV This Week on February 5, 1976.

Prime Minister Thatcher said, "...and Socialist governments traditionally do make a financial mess. They [socialists] always run out of other people's money. It's quite a characteristic of them."

Sovereign nations that run out of other people's money do not default. They simply print money. Gold buyers, as manifested in a secular trend, recognized this inevitability by 2001.

Total Consumer Credit Outstanding (TCCONSA) And YOY Change (TCOCNSA12LN):