And right behind consumers come American corporations borrowing other people's money. Last year, as a group, these companies saw their stocks appreciate about 20 percent. However, that return pales in comparison with the gains registered by the new, lean, growing companies. The Nasdaq Composite Index, made up of companies with little or no debt, rose by a staggering 85 percent. Of course, there are significant differences between these types of debt.
Businesses use loans to expand their operations with the intent of generating future profits.
The government is in the enviable position of paying down its obligations with higher revenues rather than reduced spending. And consumers are living large as they bask in the glory of a great economy. As I see it, there are three types of credit-card users. First, there are those who borrow today with the intent of paying off their debt with future earnings. These are the people who have rubbed the numbers off their credit cards as the result of constant usage.