Ordinary Americans feel guilty about the last decade.  Credit card balances are a badge of shame.

I do think there are some interesting issues to mull over. OTOH, running up credit card balances when you know you can't really afford the items is irresponsible.

OTOH, one important function of credit is to make the unaffordable affordable... over time. No one can afford to buy a house except the very wealthy. But many more people can afford a home with debt.

But since debt necessarily takes you out into the future and you can't predict the future, you can never really know if you can afford X amount of debt.

For example, when I bought my first house, I was a borderline case. My accountant at the time refused to give me the paperwork I needed to meet the bank's requirements. So I switched accountants. This was in the early 1990s, when housing was in a slump.

I've always been a freelancer, so my income is a bit unsteady by nature. But at the time, I was in the 7th year of a contract with a British advertising agency that paid me quite well. But still, when the seller accepted my offer, I gulped. Would my income hold up?

Friends said to me, "Look, you've had this contract for seven years; it isn't going to suddenly dry up." So that calmed me down a bit.

But, four months later, they canceled my contract. They were my sole client at the same and I had no visible means of support and had not been a good saver.

So was my taking on this debt "irresponsible" as my first accountant had said? Or is this a matter of my not being able to predict the future. I DID find other clients and I didn't default on my mortgage.

So...

Home prices were going up in the 2000s. Everyone said home prices never crash. People were making money. No one was losing his job. So what was the average guy to think? Was it irresponsible to do what many did, as many other people now say in hindsight? Or was it simply a matter of not being able to predict the future.

After all, Johnn Paulson, who made 15 billion shorting the housing market, had a VERY hard time getting seasoned, hard-bitten investors, especially investors who, unlike him, knew housing, to go in with him.

Destor, there is apparently a religious basis to the austerity beliefs. I didn't get a chance to research it further, but the Baptists, who migrated from the Calvinists, had (have?)specific beliefs that, for example, giving to the poor would just make them more beggarly--in other words, they're on their own. I assume the Baptists would feel even more that way if the poor were so as a result of borrowing and spending. 

Less strident than the Austrians are the Austerians.

Then there are the Austerlitzians, who think the answer to our fiscal problems is to destroy the Holy Roman Empire. Sorry, I had to get that bit of silliness out of my head.

Excellent post, destor, especially the Daily long-form version. As the clock ticked toward the debt-ceiling limit, every reasonable pundit -- and even the politicians most involved -- declared that a default would be a self-inflicted wound. Congress still stalled until the last possible moment to cobble together a half-assed deal. Not so much to avoid a default, but to avoid blame for a default.

It didn't work. Agreed, no default occurred, and the S&P downgrade proved inconsequential. But Congress (in fact, the whole U.S. political system) inflicted a very serious wound on itself. Throw-the-bums-out sentiment has soared, and now includes a big dose of throw-the-bums-out-that-we-elected-to-throw-the-other-bums-out.

Boehner reportedly walked away from a deal with Obama over $400 billion in direct taxes to the very richest. Just $40 billion a year. Without doing any math at all, I'm pretty sure the resulting market meltdown has already cost the American public (including the very wealthy whom Boehner was trying to protect) untold trillions. Self-inflicted indeed.

Is there a religious or moral dimension to this? Yeah, I think a lot of Americans think they (or the country as a whole) have sinned, mostly in worshipping at the altar of wealth and greed. But all the other stuff too: drugs, pornography, homosexuality, birth control, abortions, out-of-wedlock babies, petty crime, unemployment, welfare and off-color language in the movies and on TV.

Admitting personal fault is hard, changing your ways even harder; accepting part of a collective punishment doled out by a just God can be seen as a noble thing. And if the punishment falls a little bit harder on someone less able to endure it, well, they probably were guiltier than you were. Comforting in a way.

Rick Perry is probably on to something with his prayer meetings. Put your trust in God, vote Republican, and -- whatever results -- accept it as divine will. Fiscal crisis solved.

I'm rambling. Solid post, destor. Good comments too.