A lot of people think that the recent debt crisis is due to a lack of social responsibility and that an even greater debt problem looms over the horizon. Economic experts today are divided as to what the solution should be, as the solutions being advocated today will benefit one industry while destroying another. For example, the banking industry is advocating for increased credit and thus spending to pay back previous debts while on the other side of the spectrum, Austrian economists state that an increase in credit further exacerbates the debt problem.
Recently the rate of bankruptcy has increased considerably and therefore lenders are making an effort to cooperate with credit repair businesses in order to avoid such scenarios. Fear and greed cripples the marketplace and traders don’t know what to do, or even what to say to the general public. This in turn evokes uncertainty and is causing credit card usage to soar to record levels. This public mentality can be seen in the general rise of impulse buying where consumers purchase goods like cheerleading uniforms as opposed to purchasing assets that will yield a return on an investment. The amount of debt fueled by easy credit will take a toll on society once our ability to produce can no longer sustain the interest payments incurred by debt.
Financial institutions have a responsibility to the general public by laying down the foundations of what can and cannot be borrowed. In turn, we as a society are responsible for the actions we take and ultimately we are the ones that will determine how the debt crisis ends.