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I remember clearly the day I was offered my first credit card. It was in Berkeley, CA in 1985. I was walking on Sproul Plaza and I saw a booth manned by two students. They were giving out all kinds of swag, so I walked over to see what was to be had. T-shirts, I think. I asked them if I could get a credit card, sure that the answer had to be "no." But the answer was an enthusiastic "yes." I asked them if they understood that: a) I had no income beyond a tiny graduate student stipend; b) that I was carrying a debt from college that had been kindly "deferred"; and c) that my long-term prospects, money-making wise, were poor (the market in early Russian history degrees not being very hot). They said they didn't know any of that, but it didn't matter. All I had to do was to fill out a form and the card would arrive in the mail. I declined.

As Louis Hyman tells us in his excellent and important Debtor Nation: The History of America in Red Ink (Princeton UP, 2011), it wasn't always so. Before the 1920s, most people could get no credit at all, least of all from a financial institution. But then, thanks to a confluence of odd interests, consumer credit expanded mightily. Companies that made expensive stuff (cars) and companies that handled large pools of idle money (banks) found, much to their surprise that if you lent ordinary folks large sums of money at moderate interest, they would pay it back. The producers and banks lent more; consumers borrowed and bought more; and, in turn, the producers and banks used higher profits to increase productivity, putting still more money in the pockets of consumers. And so the cycle continued, ultimately fostering the largest expansion in production and consumption the world had ever seen. Whether it will continue is a subject of some dispute today.


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