Narrating the Story of Consumer Debt in the US

An interesting narration of the story of how consumers in the US came to be so heavily in debt appeared recently in the group blog Credit Slips. Kevin Leicht points out that real wages peaked in 1976. Since that time, the economy based on mass consumption has shifted its funding from good wages to open credit. As workers faced the exportation of industry, the decline of wages, and the shift from paying workers to paying executives, the economy depending on consumption had to find a way to keep its engine turning. Credit cards and borrowing were the replacement of a decent wage. Of course, this system ultimately took on the same characteristics of feeding on the very people on whom it depends.

This unsustainable economy has become a smash and grab system that will keep producing bubbles from irrational exuberance. The inevitable crashes will repeat as long as the idiotic assumption remains that a just economy is one in which the few are free to bleed the many until a "market correction" solves the problem. A better economy cannot come without some form of consumer protection which places guardrails and lane markers on the economic highway. Otherwise the behemoths will continue to "take their half in the middle" and push everyone else in the ditch.