How did America become a land of debt-serfs? We can trace our debt-serfdom to three core dynamics which now dominate the American economy. To understand the transition from a state of minimal financial wealth/maximum freedom to one of debt servitude (illusory wealth and sacrifice of freedom for all that lifetime debt can buy), we first need to understand the gradual nature of this transmogrification.

It has become a cultural given that major political changes are often wrought by conspiracies, official or informal. Conspiracies--otherwise known as crony or cartel capitalism and insider manipulation of process and perception--do exist. However, major cultural shifts are long, drawn-out affairs that result not from conspiracy but from the steady application of self-serving agendas by wealthy, politically powerful special interests.

It may be difficult for many to imagine, but it was once difficult to obtain credit. Two generations ago, "if you want a loan, you have to prove you don't need it." Applications for credit cards, auto loans and mortgages were examined by bank officers in your local branch, people who had actual working knowledge of your payment history, account balances, etc. (Student loans did not exist.)

A modest home improvement loan required lengthy applications and a face-to-face meeting with a senior bank officer, who asked probing questions about your personal finances. (I know this because I went through the process in 1980.)

Credit card limits were low--$500 was common--and it required an application to raise the limit on your one credit card (multiple cards were frowned upon as risky). An increase in your credit card limit was a reason to celebrate--you'd won the trust of your bank through prudent management of your money.

I know this sounds like 1880, but it was actually 1980, a mere 30 years ago. People had a home mortgage, but prior to 1970 the balances were modest in terms of annual income, and the primary reason people got a mortgage was not to speculate on housing but because it was cheaper to own than rent, as millions of veterans qualified for low-down payment VA loans. (The Armed Forces were much larger in those days, in terms of active-duty personnel as a percentage of the population.)

In this environment of what we might call "artisan credit" issued by local bank branches, debt was frowned upon as risky and buying things required saving money. The auto industry had long depended on auto loans to sell millions of vehicles, but a hefty down payment was generally required.

A household with minimal savings was deemed a credit risk; the only way to get credit was to slowly build up savings and perfect history of paying one's bills and debts. The only way for many to qualify for a credit card was to pledge cash savings to the bank: if you failed to pay, the bank would take your savings for payment of your debt.

You see the problem with this low-credit, low-risk environment: profits were slim, not just for banks but for retailers and the real estate industry. If people had to save up to buy a new item of clothing or an appliance, then the retailers were limited in how many gew-gaws they could sell. If people stayed put and didn't buy and sell their houses frequently, then developers, lenders and realtors had a very limited field of profit-making opportunities. If only people who qualified via stringent credit standards had access to credit, then the transactionf ees and interest earned from credit were also limited.

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