America is a nation that was built largely on borrowing. And as it turns out we're not so great at paying those debts off. Scott Reynolds Nelson argues in his new book, "A Nation of Deadbeats," that our deadbeat nature has been the cause of many of the country's economic crisis.
"The U.S. could not have existed as the U.S. without lots and lots of borrowing," Reynolds Nelson said. "The U.S. could not have settled in California, could not have settled in Texas, could not have done any of the expansion that took place so rapidly without a great deal of borrowing. The thing is that: we don't pay. And there are lots and lots of times that Americans don't pay and those are the crises that are the heart of not just the American economic system, but at the heart of American politics."
He said that many economists these days haven't really been trained in economic crises. "[The] long gap between 1929 and 2007 led lots of economists to believe that they had it figured all out -- 'we just need to do this, we just need to do that. There are simple things that resolve these financial panics, so there's no reason to study them anymore.'"
And furthermore, the problem is the Depression of 1929 isn't even a good model to compare the 2007-2008 financial crisis to.
"1929 is a terrible model in a way for this crisis," Reynolds Nelson said. "What we had in the U.S. was lots and lots of consumer debt, lots and lots based in the U.S., lots and lots of foreign lenders. But all the other crises that we had in the United States, all the other financial crises, have been American borrowers and lenders mostly in Europe. And it's mostly been consumer debt that's been at the heart of those crises. So 2007 actually looks like every other crisis except 1929."
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