Quote:
Originally Posted by CliffFletcher
It’s a problem in all aging, mature democracies. The costs imposed by public programs - especially health care - rise relentlessly while productivity stagnates or declines. Voters resist higher taxes. And politicians have little incentive to look beyond the next 4 or 6 years. Add an increasing cultural tolerance for debt in private as well as public life, and it’s really hard to see how fiscal sobriety will be restored before we suffer a major crisis.
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While I agree that private debt is very high right now, I think that the 1990s and late 1980s were abnormal for how low private debt was.
Going as far back as fur traders, most (read nearly all) families working for the HBC owed 98% of their pay check to the HBC by the time they were due for pay. Consumers spending nearly all of their money is as old as the hills.
in the 1910's farmers in the west were hammered by debt to afford machinery and enough land to make the machinery worth it. Personal debt was even crazier then because personal loans were allowed. That said, people had something to back their money up be it machinery or land. *
These days, people are in enormous debt without owning anything that holds liquid value. Some folks rent, drive a beater and still carry around 8 grand in debt. its money that cannot be recuperated. These people couldn't borrow money 100 years ago, or if they did they would be thrown into debtors prison after the first $1000 they couldn't pay back.
*just a foot note this isn't so simple, this contributes in some way to massive deflation in the 1930s.