The NY Times had a big piece on Sunday about Americans digging themselves into debt. Much of the article was beating up the banking industry for extending subprime loans. But, hey, why not take a swipe at the credit card industry too while they’re at it. Journalists and certain public intellectuals have been hyperventilating over consumer borrowing for centuries. That’s an improvement from medieval days when the Catholic Church made usury—i.e lending and borrowing money—a sin worthy of eternal damnation. A few years ago I assembled some of the newspaper headlines (newspaper-headlines.ppt) from the late 1800s to the present predicting that the country was borrowing itself into oblivion. Of course we’re still here, with a standard of living that has improved dramatically between each apocalyptic headline.

There’s no doubt that the economy is in a mess now and that combination of lending to poorer people and declining home prices has led to financial disasters. But I don’t believe there’s any evidence that credit cards have contributed to this crisis. If anything people had cut back their credit card borrowing in favor of home equity loans in recent years. Most people borrow responsibly, and most lenders lend responsibly. Some people borrow too much just like they drink and eat too much. And some lenders are scum. Both make great news stories I suppose but neither represents the reality of what’s going on in the economy.