Kaminska: "a complacent attitude to debt, imprudent lenders and greedy consumers"

In her investigation of the missing variable, reviewed earlier today, Izabella Kaminska briefly presents (her version of) the popular view of debt as the problem:

By the time the market started to crash in 2007, the causes seemed far clearer. What we were suffering from was a debt overhang in the Western world, driven by a complacent attitude to debt, imprudent lenders and greedy consumers living beyond their means.

Exactly wrong.

Maybe this is a straw man. I'm criticizing a view that is not Kaminska's view, maybe not even the view of whoever Kaminska was writing about. Maybe nobody's view at all.

It is still wrong.

The debt problem was not created by "a complacent attitude to debt, imprudent lenders and greedy consumers living beyond their means."

The debt problem was created by credit use.

People think -- people still think -- credit use is a good thing. But when we use credit, we generate debt.

Credit use is a good thing, and a bad thing.

The problem is not complacency. The problem is that credit-use is policy-driven, and debt accumulation is policy-driven, and these policies are very successful.

Lenders were not imprudent, nor consumers greedy. Both were doing what they had to do to satisfy the demands of policy.

The problem is the design of policy.