Americans have an insatiable appetite for consumer goods. Our ravenous consumerism has created a wholesale culture of debt. Indeed, to finance our unfettered national buying frenzy even our healthy economic output has had difficulty keeping up—as have our banks, our lending institutions, and our investment brokers. As a result we have had to borrow from foreign sources on an increasingly stunning scale.
Consider this: every year since the turn of the millennium, we have been forced to borrow between half a trillion and a trillion dollars; last year, the infusion of foreign cash required to close the gap between American incomes and consumption totaled more than $850 billion or nearly seven percent of the nation’s entire gross domestic product; the quantity of goods and services that Americans consumed last year in excess of what we produced was close to the entire annual output of Brazil (the world’s tenth largest economy); our investment balance with the rest of the world has now tipped to a deficit for the first time since World War Two.
In the current issue of the Harvard Magazine Jonathan Shaw provides a sobering look at what it may mean for us now that we are a debtor nation swiftly heading deeper into debt.