From Investing.com: 2025-06-06 02:47:00

The Ratchet Effect is a phenomenon in which expenses and debt increase as income rises, making it difficult to reverse the bloat. A couple in LA making $300K/year is drowning in $119K of debt, showcasing the struggle many face. This effect is seen in institutions as well, with a major public university going from 3.2 administrators per 100 students in 1993 to 13.5 in 2007. The normalization of extremes, like the $1.8 trillion in student loan debt, has made it hard to see the impending collapse. With a new culture and value system needed, many organizations are struggling to adapt and avoid breakdown.



Read more at Investing.com: The Ratchet Effect: Why Spending More Is Easy but Cutting Back Breaks the System