With stagnant wages and booming consumption, the cash-strapped American masses had a virtually unlimited demand for loans but an uncertain ability to repay them.
The quote from "The Big Short" by Michael Lewis highlights the economic conditions faced by many Americans. Despite their wages remaining largely the same, consumer spending continued to rise significantly. This disparity created a scenario where individuals sought loans to finance their purchases, leading to a culture of borrowing that surpassed their financial means.
This situation resulted in a precarious balance between consumer demand and financial stability. As people took on more debt to support their consumption habits, the risk of default loomed large, reflecting a broader concern about the sustainability of such financial practices. The tension between the immediate gratification of purchasing and the long-term economic impact of loans showcases a key issue in the financial landscape of that era.
