The New Culture of Indebtedness

Abstract

Debt certainly is not new, but above all in the period prior to the 2008 crisis, many countries witnessed a marked increase in private indebtedness. Indebtedness stimulated market demand and therewith also economic growth. But debt cannot be increased interminably. Greater borrowing by private households constituted a novel form of consumer behaviour oriented toward premature consumption. With the growth of the tendency to borrow, also due to the stagnating incomes of the middle class, the risk of indebtedness grew, as did the power of financial markets. The chapter shows how changed lifestyle and consumption patterns in interaction with the liberalization of financial markets and the banking system strengthened the debt-based market ties of large segments of the middle class.