Consumer credit
Borrowing against your own future income. The most personal instrument here.
The invention
The problem. Harvests are seasonal and needs are not.
Consumer lending predates coinage by a millennium — grain advanced against next harvest, at rates already regulated. The modern version arrived in 1950 with Diners Club, and in 1958 when Bank of America mailed 60,000 unsolicited cards into Fresno. That mailing worked, and revolving credit became normal within a decade.
[Female Portrait Bust on Pedestal]
1890s · The Metropolitan Museum of Art · CC0
Promissory notes : on the literary conditions of debt
2018-01-01 · Library of Congress · Public domain
Where it has failed
Not a list of disasters. A pattern library.
- 1929United States
Buying on margin
Investors borrowed up to 90% of a stock's price; falling prices forced selling, which drove prices lower.
Leverage converts a decline into a cascade. The mechanism is mechanical, not psychological.
- 1997East Asia
Dollar borrowing, local revenue
Corporate and bank borrowing in dollars against local-currency income unwound violently when currencies fell.
Borrowing in a unit you do not earn in is the same error at every scale.
- 2007–2009United States and Europe
The mortgage crisis
Household debt was packaged and rated as though its risks were independent. They were correlated.
The instruments were novel. The failure was not: too much borrowing against an asset assumed to keep rising.
Where it stands today
You now have the shape. Here is the reading.
Live from public data, pulled at request time. Read it with the failures above in mind — not because a repeat is due, but because knowing the mechanism is what lets you recognise one early.
30-year fixed mortgage average
Freddie Mac via FRED
No data returned
FRED (St. Louis Fed) needs FRED_API_KEY in your environment. It is free to obtain — see the sources screen for the link.
Freddie Mac via FRED
Federal funds rate
Federal Reserve via FRED
No data returned
FRED (St. Louis Fed) needs FRED_API_KEY in your environment. It is free to obtain — see the sources screen for the link.
Federal Reserve via FRED
In your ledger
The instrument most likely to be in your ledger right now. A carried balance is a claim on income you have not earned yet, repriced daily.
See it in the demoKeep reading