Arguing that the United States “was built on debt,” Claude S. Fischer takes a benign view of our borrowing and spending, especially countering those who blame it for the recent financial crisis:
The Americans who couldn’t get a bailout took on loans for what they thought were the right reasons. Yes, between 1989 and 2007, with more and more businesses accepting credit cards, Americans roughly tripled their credit card debt, a $2,300 rise in outstanding balances per family. But the swell of debt is almost entirely accounted for by the cost of housing, which grew as more Americans became homeowners. In those same years, 1989 to 2007, Americans increased their mortgage debt by an average of $46,000 per family. One may protest that Americans bought “too much house,” but in an era of stagnant wages, houses stood out as good investments. And, until the bubble burst, they were. Americans were not engaged in a bacchanal of self-indulgent borrowing. The percentage of family debt incurred for “goods and services” hardly changed between 1989 and 2007. Americans were buying—or borrowing—into the smart-money strategy of real estate ownership.
After the bubble burst, between 2007 and 2010, credit card balances dropped by about $800 and mortgage debt by about $3,500 per family. The biggest change lately in the debt burden has been a rapid increase in borrowing for education, which is also investment rather than consumption, and is driven not by private habits of excess but by college and state government budgets.
The Dish 