The Banality of Debt

Moneybox
A blog about business and economics.
June 5 2012 12:49 PM

The Banality of Debt

83653253
DES PLAINES, IL - NOVEMBER 11: A sign showing the American Express logo is seen outside of a bank November 11, 2008 in Des Plaines, Illinois.

Photo by Justin Sullivan/Getty Images

David Brooks wrote a column today about the Wisconsin recall election, but to avoid being totally boring he mixes it in with an extended discourse on debt:

Today we are living in an era of indebtedness. Over the past several years, society has oscillated ever more wildly though three debt-fueled bubbles. First, there was the dot-com bubble. Then, in 2008, the mortgage-finance bubble. Now, we are living in the fiscal bubble.
Advertisement

He has some intriguing theories about the psychological underpinnings of this shift. But did the shift even happen? Here's a chart about the alarming acceleration in American household debt:

1338914936085

Now here's the same chart in logarithmic scale:

1338914963558

It looks to me as if what happened is this. Starting at the end of World War II, American households began accumulating debt at a steady pace that continued uninterrupted throughout the Cold War, the Sexual Revolution, Ronald Reagan, the dot-com era, 9/11, the house price bubble, etc. Then since 2008 or so there's been a totally unprecedented process through which nominal household debt levels have declined. 

In part in response to that unprecedented deleveraging, the federal government has borrowed a lot of money at extremely low interest rates. Mathematically speaking, it's not possible for David Brooks to save money unless someone wants to borrow the money. If a country as a whole wants to become a net saver then it has to do what Germany did and lend the money to people residing abroad somewhere.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Technology

Driving in Circles

The autonomous Google car may never actually happen.

Where Ebola Lives Between Outbreaks

Gunman Killed Inside Canadian Parliament; Soldier Shot at National Monument Dies

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

The Simpsons World App Is Here, and Nearly Perfect

Science

“I’m Not a Scientist” Is No Excuse

Politicians brag about their ignorance while making ignorant decisions.

Politics

The Right to Run

If you can vote, you should be able to run for public office—any office.

In Praise of 13th Grade: Why a Fifth Year of High School Is a Great Idea 

Renée Zellweger’s New Face Is Too Real

  News & Politics
The World
Oct. 22 2014 2:05 PM Paul Farmer Says Up to Ninety Percent of Those Infected Should Survive Ebola. Is He Right?
  Business
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
  Life
Education
Oct. 22 2014 4:45 PM Welcome to 13th Grade! Several Oregon high schools are offering a fifth year of high school. Every district should consider it.
  Double X
The XX Factor
Oct. 22 2014 4:27 PM Three Ways Your Text Messages Change After You Get Married
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
  Arts
Brow Beat
Oct. 22 2014 4:10 PM Skinny Mark Wahlberg Goes for an Oscar: The First Trailer for The Gambler
  Technology
Future Tense
Oct. 22 2014 5:33 PM One More Reason Not to Use PowerPoint: It’s The Gateway for a Serious Windows Vulnerability
  Health & Science
Wild Things
Oct. 22 2014 2:42 PM Orcas, Via Drone, for the First Time Ever
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.