I've heard it said (and I don't know how true it is) that during the Reagan (I think) administrations, they "convinced more than half of the people that they were in the top 50%", meaning that people began to think of themselves as more well-off than they actually were, and started spending more than saving.
I have no idea if that's accurate, but it's an interesting thought. For the economy overall, it's probably best if everyone buries themselves as far into debt as they can, because it increases spending tremendously. Max out credit cards, buy as much "stuff" as possible (cars, real estate, college degrees, whatever).
The problem is that when the first real bump in the road comes along, suddenly most people are leveraged to the hilt and can't absorb the hit. And it feels like as long as I've been conscious (and maybe longer, who knows), we've been in this cycle of "easy money, spend spend spend" followed by "crap, bubble". Sure there's money to be made on the upside, but there's even more to lose on the way down.
I have no idea if that's accurate, but it's an interesting thought. For the economy overall, it's probably best if everyone buries themselves as far into debt as they can, because it increases spending tremendously. Max out credit cards, buy as much "stuff" as possible (cars, real estate, college degrees, whatever).
The problem is that when the first real bump in the road comes along, suddenly most people are leveraged to the hilt and can't absorb the hit. And it feels like as long as I've been conscious (and maybe longer, who knows), we've been in this cycle of "easy money, spend spend spend" followed by "crap, bubble". Sure there's money to be made on the upside, but there's even more to lose on the way down.