I was a little confused by this post from Felix Salmon since he has a chart that seems to compare a nominal quantity to an inflation-adjusted one, so I thought I'd just do the ratio of Total Credit Market Debt Owed (which is nominal) to Nominal Gross Domestic Product, and we see:
This is one of these things that I'm not sure what to make off. If you ignore everything that happened subsequently, that mid-eighties debt boom sure looks unsustainable. And yet sustained it was, and it would take an extraordinary period of decline to get us back down to those levels.
It turns out that we can disaggregate TCMDO considerably, although doing so in FRED gives us a very ugly chart. So I disaggregated into four slices and made a pretty chart in Excel. One is financial sector debt, one is non-financial corporate debt, one is household debt, and one is federal debt + state and local debt all then expressed as a share of GDP:
Now it looks like in the eighties we had an unusual situation in which all four categories of debt went in the same direction simultaneously. And lately some more stuff. I don't have a strong hypothesis here.