In our time, the financial sector has enriched itself by devouring the productive wherewithal of industrial America, starving the public sector of resources, and saddling ordinary working people with every conceivable form of consumer debt. The deindustrialization of America, which began in the 1970s and has continued ever since at an accelerating rate, was set in motion by the country’s leading financial institutions. All those mergers and acquisitions, leveraged buyouts, junk-bond acquisitions, and the “lean and mean” asset-stripping that followed saddled the productive sectors of the economy with insupportable debts. These were, on the one hand, lucrative securities for the banks and private-equity and venture-capital firms that issued them. But for ordinary working people, they delivered plant shutdowns, massive layoffs, declining real wages, diminished pensions, and reduced or nonexistent health care. And then came the unconscionably profitable securitizing of the homes where people lived—and in due time could no longer live. Taking on ever greater loads of debt has become, for many, the only way to tread water. Household debt, which in 1952 was at 36 percent of total personal income, had by 2006 hit 127 percent. Even financing poverty became a lucrative enterprise. Taking advantage of the low credit ratings of poor people and their need for cash to pay monthly bills or simply feed themselves, some check-cashing outlets, payday lenders, tax preparers, and others levy interest rates of 200 percent, 300 percent, and more. As recently as the 1970s, a good part of this would have been illegal under usury laws that no longer exist. These poverty creditors are often tied to the largest financiers, including Citibank, Bank of America, and American Express.

Credit has come to function as a plastic safety net in a world of job insecurity, declining state support, and slow-motion economic growth, especially among the elderly, young adults, and low-income families. More than half the pretax income of those three groups goes to servicing debt. Nowadays, however, the company store is headquartered on Wall Street. Debt is driving this system of autocannibalism [...]