Hitting the debt wall is a dire financial situation that can occur when a nation depends on foreign debt and/or investment to subsidize their budget and then commercial deficits stop being the recipient of foreign capital flows. The lack of foreign capital flows reduces the demand for the local currency. The increased supply of currency coupled with an increased demand then causes a significant devaluation of the currency. This hurts the industrial base of the country since it can no longer afford to buy those imported supplies needed for production. Further, any obligations in foreign currency are now significantly more expensive to service both for the government and businesses.
This same concept has also been applied to personal debt. Specifically it has been applied to students who get in over their heads with student loans to finance their education.
Famous quotes containing the words debt and/or wall:
“Live within your means, never be in debt, and by husbanding your money you can always lay it out well. But when you get in debt you become a slave. Therefore I say to you never involve yourself in debt, and become no man’s surety. If your friend is in distress, aid him if you have the means to spare. If he fails to be able to return it, it is only so much lost.”
—Andrew Jackson (1767–1845)
“This is Wall Street, and today is important. Because tomorrow, July 4th, I intended to make my first million dollars—an exciting day in a man’s life. The enterprise was slightly illegal.”
—Abraham Polonsky (b. 1910)