[quote=The-Shoveler]I don’t really think much has changed with the entitlement mentality (well for the last 50 years anyway), the only real change is inflation used to have borrowers back to a certain degree. What I remember being told when I was looking for my first house “buy as much house as you could possibly afford, your wages will grow into it”.

The current low wage inflation since 1990 or so is very strange.[/quote]

No. What had borrowers back is the steady decline in interest rates for the past 30 years. You could increase your total debt load for the same monthly payment as rates declined. You didn’t need income growth to increase your total debt load you just needed the decline in interest rates. Everybody that is levered up and plans on re-rolling debt is going to be screwed in the future.

This is the reason why higher than average inflation isn’t a way out. Nobody lends at a loss so higher than average inflation will push short terms rates higher than inflation and most won’t be able to afford the significantly higher monthly payments when they have to roll over the debt. Those that hold 30 year MBS written now are screwed. Of course it’s probably CalPRES and other public sector employee pension funds holding most of that junk but they don’t care because they expect to get bailed out.