Americans have been borrowing against their houses to buy a standard of living higher than they could afford. Globalization in the form or cheap Chinese and a previously strong currency allowed us to feel flush.
That is exactly the point.
United States have been losing goods-producing jobs at an accelerating rate since the time Reagan was the president.
When you quit your job, it makes you poorer. When you quit your job and start living off credit cards, you can feel richer but at some point you will have to pay. Even if you declare bankruptcy and your debt is wiped, you’ll have to cut down on spending.
United States have been increasingly living off credit cards for 25 years. Increased spending came at the expense of growing debt, which was masked by apparent increase in equity.
Don’t blame people treating their homes as ATMs. They just do what they must to survive. Don’t blame globalization, either. In today’s globalized world, Germany and Sweden manage to export more than they import. Italian trade deficit is minimal. Living off credit cards seems to be an English-speaking phenomenon (US, UK, Australia).
