Part 2/10:
When we hear about debt in mainstream discussions, it often refers to government or sovereign debt—amounting to tens of trillions of dollars in the U.S. alone, accrued through years of deficit spending. Governments usually manage this debt by issuing bonds, promising to pay back investors, often using taxpayer money or even printing more currency if necessary.
In contrast, consumer debt is distinctly separate; it consists of the borrowings individuals take on from banks and lenders, including credit cards, auto loans, mortgages, and student loans. Unlike government debt, which can be managed through fiscal policies, consumer debt is collateralized by individual assets like income and housing. In early 2025, total U.S. household debt reached a staggering $18.2 trillion, a record high.