If you listen to our grandparents, in the old days nobody ever borrowed. Angelic models of virtue, they bought only what they could afford. The Great Depression had instilled values in them that these young people today just do not have. On some level, older Americans consider all this borrowing to be a moral failure without precedent.
The historical record would beg to differ. In my new book, "Borrow: The American Way of Debt," I show how personal debt became widespread in the 20th century--and it didn't just happen in the past few years. Paradoxically, it was the very prosperity of that postwar generation that enabled so much borrowing to occur because it was in the postwar that bankers began to discover how profitable it could be to lend to consumers. The good wages of the postwar made profitable borrowing possible. As those good jobs faded, the borrowing remained. Unlike our parents and grandparents, we borrow but we just don't earn enough to pay back what we borrow. But don't let my words convince you.
Nor did it mention that the banking deregulation and other policies that led to our current economic hardships resulted mainly from lobbying of both Democrats and Republicans by corporations involved in finance and housing.
And I'll add that voters could have prevented that by refusing to vote for any politician who accepted campaign contributions from special interest groups.
Usury laws. Making money from money is inherently volatile. No interest rate--on any loan--ought ever be higher than 5%.
That's right, 5%. This is plenty of profit for the financial service of a loan.
At 5%, the bank-drive credit card madness would stop. Consumers could actually stand a change of paying-off their balance. Revolving credit would no longer be a source of billions in revenue earned at the expense of trapping Americans into permanent unpayable debt for having purchased sweaters, jeans and shoes.
Credit ought never have become lucrative enough that an entire industry could spring-up around it. It ought always have been a service extended by banks to regular depositors. Like, period.
In Mexico in the mid-'90s Wall Street engineered a currency coup that tripled the debt owed by small businesses and family farms and also allowed for them to be massively ratejacked on top of it. Mexicans consequently formed the "el Barzon" movement and pushed back Wall Street and deposed their ruling party of 60+ years. In this country YouTube phenom Ann Minch has already declared the debtors' revolt and begun going after them.
If you've been pushed under, you can read every other page of my book for free: http://www.scribd.com/doc/25443175/Debt-Hope-Down-and-Dirty-Survival-Strategies-Evaluation-Version-Complete