Scott Reynolds Nelson, son of a repo man, argues that since the beginning America has been founded on credit:
The story of my dad, [his company] Woolco's debtors, and the debts he collected is in some sense the story of America. Americans settled this nation by borrowing goods, land, and more abstract representations of those goods—land warrants, deeds, patents, concessions, and equities. They borrowed with the most optimistic assumptions about their capacity to pay. But when it became clear that Americans were not paying, banks began to doubt wholesalers and called in loans; wholesalers demanded settlement from retailers; retailers sent my dad and thousands like him out into the countryside to recall some portion of their property. I saw the downturn in 1973 unfold outside the window of a Dodge Dart, and in graduate school and after I became fascinated by many other slumps.
Pundits will tell you that the economic turmoil the nation experienced in 2008-9 is the first "consumer debt" crash. The trunk of my father's car—filled with signed debt agreements for consumer goods, most of which, he said, were good for nothing—suggests otherwise.
Meanwhile, Felix Salmon cheers an important trend:
[E]ven as America worries about the rising level of student loan debt, here’s some good news: the level of credit-card debt is going nowhere, and is actually falling in real terms. Let’s keep that up. It will mean lower profits for the big banks, who issue the lion’s share of all credit cards, and it will mean lower interest payments for consumers.
This prompts him to wonder if "the credit-card scam – sell convenience, and then make billions of dollars from overinflated interest rates – is beginning to come to an end."
(Chart from the Peter G. Peterson Foundation)