Financial Advisor Tim Hayes

10 Years After the Financial Crisis, Does the U.S. Still Have a Debt Problem

Financial Advisor

Tim Hayes

Securities Licensed in MA, RI, NH, ME, CT, NY, & FL

I am an Investment Adviser Representative at Cambridge Investment Research Advisors, Inc., a $44B RIA based in Fairfield, IA. I am also registered with Cambridge Investment Research, Inc., an independent broker-dealer with over 3,000 registered representatives nationwide.

Most clients pay fee-only or an hourly rate. The size and complexity of the client’s wealth management and financial and retirement planning determine that fee.

Some clients pay a commission, mainly those with smaller accounts, i.e., Roth IRAs, some public-school teachers with 403b retirement accounts, or parents or grandparents who set up a 529 college savings plan.

The first introductory and fact-finding appointment can be in-person or by phone. The next meeting where I provide my recommendations should be in-person. (For the time being, telephone, Zoom, and email are replacing some meetings.)

Subsequent meetings during which we monitor your progress and investments can be done in-person or by phone, email, Zoom, or Skype – or, more likely, a combination of these meeting types.

Yes. The amount of debt today is higher than it was before the financial crisis. Before the Great Recession, the total debt in the U.S.—that is, government, business and personal debt combined—was $53 trillion. At the end of 2017, it had increased by 28% to $68 trillion.

There was a period at the bottom of the Great Recession in 2009 in which total debt relative to the size of the economy (gross domestic product, or GDP) was higher than it is today. But that was when the GDP was at its low point.

The critical debt rate is what was before the financial crisis. That was the level of debt that helped break the economy. And it is the same now as it was then.

Plus, if you add the $4 trillion of debt the Federal Reserve owns—which must be replaced with new public and private debt if the Fed wants to continue reducing its balance sheet—the ratio of debt to the size of the economy today is higher than it was before the financial crisis.

Do these high levels foreshadow another financial crisis? Not necessarily. Today we have more government and corporate debt and less mortgage debt. And governments and corporations might be better able to withstand higher interest rates than homeowners with subprime mortgages could do.

That test is coming. The Federal Reserve has been hiking short-term rates, and last week long-term interest rates finally spiked. Rising rates put pressure on highly indebted individuals, corporations, and, in some cases, governments.

These are the opinions of Tim Hayes and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.

Fee-Only, Hourly Rate, or Commission

Most clients pay fee-only or an hourly rate. The size and complexity of the client’s wealth management and financial and retirement planning determine that fee.

Hourly Fee

$ 150 /Hour
  • Financial Advisor
  • Financial Planning
  • Advisor Financial Planner

Fee-Only

Varies
  • Fee Based
  • Fee-Only Financial Planning
  • Fee-Only Financial Planner
  • Financial Planning Services

Commission

Varies
  • Financial Professional
  • Commission Based
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