At the end of the day, a significant fraction of members of both houses of Congress voted to keep the federal government in bankruptcy, to push it into insolvency, so that it couldn’t pay its bills. After all the problems in recent years with mortgages and credit cards, the recent debt ceiling story is just another example of the destabilizing effect of debt. The U.S. government’s debt derives mainly from the war in Iraq, and the debt used to finance that war was not as harmless as it seemed at the time. Without that debt, the extremists in the House of Representatives wouldn’t have had the leverage to hold the country hostage, or to work out a compromise that pushes the country into an economic decline.
After so many bad experiences with debt, it is no wonder many people are starting to think of it as the equivalent of a live electric wire. It’s something you may need, but also something that must be handled with extreme care.
One of the challenges is that many of us are in so much debt that we are seem destined to die in debt. “Never got out of debt” may be the new equivalent of “never went to college” from a century ago. For many people, the answer to “never went to college” was that their children could go to college. We will need a better answer than that for the millions of people who are perpetually in debt.