Americans have a long, sordid history with borrowed money. In Collateral Damaged: The Marketing of Consumer Debt to America, Charles Geisst, a professor of finance at Manhattan College, takes us through the centuries to explain how we wound up at our most recent””and spectacular””credit bubble. TIME’s Barbara Kiviat spoke with him.
You write that one of the major myths about American society is that we used to be prudent with our money and only recently did we go astray. What’s the real history?
Americans are speculative people. During and after the Civil War, for instance, there was a lot of stock market and commodities speculation””people trying to make a quick buck. But it was only when financial institutions picked up on that and provided the methods whereby you could buy now and pay later””that very simple concept””that things started to change structurally. Now Americans are more highly leveraged than they were in the past.
Which makes our most recent downturn worse?
Yes, absolutely. We’re out of proportion with our amount of personal debt. A good number of people are in debt to the point where they may not ever be able to pay their way out.