Last month, the Federal Reserve confirmed the ominous news. The decline in US household debt from sky-high 2008 levels has halted, and the figures are on the rise again – up by $241bn (or 2.1%) in the fourth quarter of 2013, following a smaller increase in the third quarter. Unlike auto loans, mortgages, and credit card balances, student debt never fell at all, and is fast approaching $1.2 tn. Economists seem to have decided that the “debt overhang” from the crash has now been resolved; not only is it safe to start borrowing again, it’s a must if we are to get back on track with GDP-driven growth. With aggregate debt still at a staggering $11.5tn, this is bad analysis and bad advice. As for reviving GDP business as usual, all the evidence suggests this kind of growth is a recipe for eco-collapse.

Confronted with these exorbitant numbers, it’s natural to gripe that debts of such magnitude will never be paid off in our lifetimes. But that’s to miss the point. In a creditocracy – the kind of society we now live in – debts are not supposed to be paid down entirely, for the same reason that credit card issuers don’t want us to clear our credit card balance every month. Those who diligently pay up are derided in industry circles as “deadbeats”. The preferred customers are “revolvers,” who can’t quite make ends meet but who pay the monthly minimum along with penalties or late fees, ensuring a steady flow of revenue to banks. Creditors’ profits depend on keeping us in debt for as long as we live, and even beyond the grave in the case of parental co-signers for student debtors who die before they have performed less than an average lifetime of debt service.

Read the full op-ed at the Guardian.

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