Op-Ed Columnist - The Next Culture War - NYTimes.com: "Other signs are bigger. As William Galston of the Brookings Institution has noted, in the three decades between 1950 and 1980, personal consumption was remarkably stable, amounting to about 62 percent of G.D.P. In the next three decades, it shot upward, reaching 70 percent of G.D.P. in 2008.
During this period, debt exploded. In 1960, Americans’ personal debt amounted to about 55 percent of national income. By 2007, Americans’ personal debt had surged to 133 percent of national income.
...These may seem like dry numbers, mostly of concern to budget wonks. But these numbers are the outward sign of a values shift. If there is to be a correction, it will require a moral and cultural movement. Our current cultural politics are organized by the obsolete culture war, which has put secular liberals on one side and religious conservatives on the other. But the slide in economic morality afflicted Red and Blue America equally.
Here is a graph:
Krugman thinks it is due to financial deregulation in the early 1980s, but Tyler Cowen doesn't think the evidence is compelling. However, something happened around 1980 that made both public savings and private savings decline in the US. Public savings recovered in the 1990s, but private savings kept dropping right down to zero a short time ago.
Also, notice the paradox of thrift during recessions on the graph?
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