In 2004, US households owed 119 per cent of their disposable income, UK households 155 per cent and 108 per cent in Canada (Office for National Statistics 2004; Federal Reserve Bank 2004; Statistics Canada 2005). The outstanding totals of consumer credit has been calculated in the United States as $769 billion (Federal Reserve, 2003), in the United Kingdom £157 billion (Office for National Statistics, 2004), and in Canada $288 billion (Statistics Canada, 2003). The escalating level of consumer indebtedness in these three countries has not gone unnoticed. There have been many important contributions to understanding the causes of this recent trend of household over-indebtedness. These can be put in three broad categories: those who believe the cause is over-borrowing by consumers, those that see the cause as over-lending by banks, and those who claim it is low interest rates. For those that ascribe to the first claim, it is usually the case of the hedonistic consumer, the decline of thrift in society, or the magical effects of a plastic card that does not allow for restraint that has caused escalating debt levels. For those who accept the second claim, it is that relaxed banking regulations, aggressive marketing campaigns, and millions of mail outs that have led to increased debt for households. While the rest simply believe that consumers are acting as rational economic units and responding to the stimuli of low interest rates.
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Montgomerie, J. (2007). The Logic of Neo-Liberalism and the Political Economy of Consumer Debt-Led Growth. In: Lee, S., Mcbride, S. (eds) Neo-Liberalism, State Power and Global Governance. Springer, Dordrecht. https://doi.org/10.1007/978-1-4020-6220-9_10
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