479: Debt

Are you comfortable carrying long-term debt?

Full episode script

The history of debt has two narratives — and not surprisingly, they’re pretty much diametrically opposed.

One is considered the “standard narrative” of the history of money and debt. That narrative is that societies operated on barter systems, and eventually those barter systems transitioned to monetary systems. Those systems included, eventually, systems that allowed money to be lent and debt to be carried. There are records from the Roman bureaucracy that detail laws about interest owed, debts owed, and even laws about the amount of interest that could legally be charged.

The competing narrative of debt is very different. Initially detailed by David Graeber in a 2011 book titled Debt: The First 500 years, the theory is that economic systems started with debt, and eventually monetary systems were developed to make the measurement, discussion of, and tracking of that debt much more precise. He also argues that barter and cash systems were considered “lower class” systems that were only for those who didn’t “deserve” credit.

Wherever it came from, debt — especially debt that sticks around for more than a year as long-term debt — is pretty much a way of life for many people, in America at least. According to November 2017 statistics, consumer debt in the US was worth $3.827 trillion. 73 percent of that is long-term debt, and a large portion of that is educational debit.

OCED data from 2018 says, though, puts the US in the middle of worldwide household debt. Denmark has the most, with the Netherlands, Norway, Switzerland, and Australia, all clocking in at over 200 percent of net disposable income.

This script may vary from the actual episode transcript.