When Easy Credit Replaces Wage Increases, Prosperity is Fragile and America's Middle Class Suffers
The American middle class has been in trouble for decades, but this was not obvious until the recession of 2008 because consumer purchases held up. How was that possible? The simple answer is that financiers devised ways to loan money that severed the link between profits and middle-class well being. Reckless trading in mortgage-backed securities and other asset-backed instruments allowed the issuers of credit to make record profits, regardless of whether consumers could pay off their debts. When millions became unable to pay back loosely regulated loans, the United States plunged into financial crisis. To put recovery on sound footing, policymakers must boost middle-class incomes and block the reemergence of reckless credit practices.
Read more in Kevin T. Leicht and Scott T. Fitzgerald's book, Post-Industrial Peasants: The Illusion of Middle Class Prosperity