With literally trillions of dollars in personal debt now hanging over the American consumer, the question might be asked as to where all this debt came from.
It has a long history. Buying on credit started at the turn of the twentieth century. Buying dreams on credit was an American invention that served to create the consumerism of modern times. The installment plan soon became the way to buy automobiles, furniture, pianos and high-ticket items. By 1924, for example, nearly 75 percent of all cars were bought on credit and 80 percent of all appliances.
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The promotion of personal debt turned credit into an engine of economic growth…and bankruptcy. Mass consumption led to the roaring twenties when consumer spending burst all limits and prepared the way for the bust of the Depression.
Installment buying later prepared the way for the credit cards, long-term mortgages and other instruments of credit. The credit wave turned what was once considered a privilege to deserving individuals into an entitlement to be enjoyed by all Americans. It also prepared the tragic consequence of such uncontained spending – the mountain of personal debt that now threatens the nation.