Matt Stoller:
Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages. All of these are hard to pay back, often bringing with them impenetrable contracts and illegal fees. Credit card debt is difficult to discharge in bankruptcy and a default on a home loan can leave you homeless. A student loan debt is literally a claim against a life — you cannot discharge it in bankruptcy, and if you die, your parents are obligated to pay it. If the banks have their way, mortgages and deficiency judgments will follow you around forever, as they do in Spain.
Probably the most insightful take on the role of debt in the late unpleasantness so far has actually been the conservative Rajan Raghuram, who has argued that increasing income inequality over the past few decades is directly connected to the rise in credit-fueled consumption as a substitute for growing middle-class wages. Obviously, he takes it in a different direction than I would, but I think the next step to be taken after naming the problem of too much indebtedness is asking how we got to this state and (more importantly) what to do about it. Stoller, of course, recommends a round of debt cancellation, which is a radical solution — besides depriving the banks of a revenue stream, any number of pension funds and mutual funds wouldn’t stand for such an action. A more politically salable approach would be more robust economic growth, which would help erode the amount of debt people have to service. But then, assume a can opener.
