I will gladly pay you Tuesday for a hamburger today.

—Wimpy

A third of the way through The Hole We’re In, Gabrielle Zevin’s novel about the modern-age descent into debt, Roger Pomeroy wonders how the hole got dug in the first place. “Because, honestly, where had all the money gone? It was not as if they had been living high on the hog. The money hadn’t been going to the church (Roger was in arrears in his tithes). And his wife had apparently been stealing from their only son.”

Having maxed out the family credit cards, Roger’s wife, Georgia, had run up a further $10,000 debt by opening a credit card in the name of the couples’ son, Vincent, a no-income student, allowing her to cover the cable bill ($72.89), a dinner at Fuddruckers ($35.17) and so on. Heightening Georgia’s financial desperation is the looming wedding of the Pomeroys’ elder daughter, Helen, who sets her sights impossibly high, envisioning a nuptial tableau enhanced by a pond dug in the backyard (yet another hole) dotted with swans. “You rent them for a day,” Helen informs the increasingly stricken Gloria. “Then give them back.”

Only upon the death of Roger’s mother, and the inheritance that that bestows — indebted, hopeful inheritors will feel a pang of recognition here — are the Pomeroys able to crawl out of the hole they’re in and all the way up the financial ledger to, get this, zero.

Despite it being a work of fiction, there is little fantasy in Zevin’s take on financial despair. We’re in a mess of debt. The big, naked number being used to sound the alarm is $1.41 trillion, representing Canadians’ total household debt (outstanding balances of consumer credit and residential mortgage credit) as of December 2009.

But that number is so plump in its nakedness that it doesn’t mean much, absent an exploration of the trend lines that lay beneath. Such as: Households have increasingly substituted consumption from income with consumption from credit; the share represented by revolving credit (those credit lines that have become so fashionable, by example) within total consumer credit grew to 77.7 per cent by the end of last year, up from 21.1 per cent in 1989; Canada ranks first among a list of 20 countries of the Organization for Economic Co-Operation and Development — including the United States — when consumer debt-to-financial-assets ratios are compared. That’s just a taste of the dour revelations in a report released earlier this month by the Certified General Accountants Association of Canada.

Who among us registers a note of surprise? Why it seems like only yesterday that the nice young man at the bank suggested an interest-only line of credit, far, far larger than anything we could possibly need, tied to the mortgage. It seemed like such a gift!

But back to you.

Thus indebted, the Canadian consumer is perilously exposed to increases in interest rates and awaits — anxiously, no doubt — word from the Bank of Canada as to whether it will raise its key interest rate at its next opportunity, which arrives on Tuesday.

Should the bank move higher — the OECD pushed for that very measure in an economic outlook released this week — the cost of consumer borrowing will follow, as surely as Wednesday follows Tuesday.

Elena Simonova, senior research and policy analyst with the Certified General Accountants, helpfully crunches some numbers. Take a $250,000 mortgage amortized over 25 years. Imagine an increase in the interest rate on that mortgage rate to, say, 6.55 per cent from 4.55 per cent. Over five years, the cost of carrying that mortgage will increase by $17,500. Let’s assume the family in question maintains its current level of spending on such essentials as food and transportation. In order to accommodate the higher mortgage costs, that same family will have to cut 11 per cent out of “other” spending — personal care, education, vacations, pension contributions. (Simonova crunched the data based on Statistics Canada guidelines for family spending by a mid-to-high income family.)

The conventional thinking goes like this: Canadians have gorged themselves on debt in this era of so-called “free” money, backstopped by inflated real estate values. (A report out of the CIBC this week estimates that house prices in Ontario are over-valued by 11.7 per cent.)

In this we have fallen for the inducements of consumer goods manufacturers, who understand intimately the allure of sub-zero refrigerators and cork floors.

You could call it, as the CIBC did in an old advertisement for personal loans, “The difference between hoping and having.”

Or, to cite a Bank of Montreal promotion, “A boat and trailer add zest to life.”

Both advertisements were referenced in the Final Report of the Select Committee of the Ontario Legislature on Consumer Credit, which found that consumer credit had emerged as the only way many Canadians could get the goods and services they want. “Because credit is so easily available,” said the report, “those unskilled in money management may sink heavily into debt.” Money — a.k.a. borrowing — was in plentiful supply. The period of study: April, 1964 to June, 1965. “While former generations avoided debt and paid cash for goods and services,” the report continued, “today most of our major purchases are made on credit.”

It’s curious that a sentiment expressed a half century ago can seem so fresh, so of the moment.

Lendol Calder, professor of history at Augustana College in Rock Island, Ill., posits this incendiary suggestion: that our forebears weren’t as financially virtuous as we’ve been led to believe. “What everybody knows about thrift goes like this: that once upon a time in a golden age of thrift everybody lived by their means and nobody went into debt. People disagree on when this golden age was. Some people that you’re reading right now in the newspapers think it was just before the ’90s, before our current crisis. For them the snake in the garden is home equity lending, where families used their equity as a kind of personal ATM. [Before that] people often thought of the golden age as being before the ’60s, and they blame it on universal credit cards and revolving credit. . . Going back to the 1920s there were moralists who were saying America had lost its moorings thrift-wise, and they blamed the debt on installment credit.

“What I have come to believe based on my research,” Calder continues, “is that this golden age of thrift never really existed.”

Even Eaton’s was in the game early, announcing in the winter of 1936 the introduction of the Eaton Budget Account, “with which you may buy anything in the store (with a few exceptions, such as provisions, etc.) and have three months to pay. What a boon to Christmas shoppers!”

The current golden age of borrowing has been abetted by the easing of access to credit and home ownership, which invites an examination of human behaviour as much as it invites the predictable number crunching by macroeconomists. Jason Kilborn, now an associate professor at the John Marshall Law School in Chicago, examined behavioural economics in the context of over-indebtedness during his previous life at Louisiana State University Law Center, and he is willing to tackle this question: Why do we do what we do?

“There are a number of different levels in which we can approach your question,” he says. “One is the cognitive level: Why do we overestimate our ability to control our own impulses? We overestimate, most importantly in my view, the likelihood of good things happening to us in the future and we underestimate the quite substantial — and in this day and age growing — risks of bad things happening to us.”

There’s an upside and a downside to such behaviour. “We as humans wouldn’t likely be alive today if we didn’t have these tendencies, because life is scary and full of risk,” Kilborn continues. “If we didn’t have these incredible impulses driving us forward with this optimism bias of ours, we probably would have thrown up our hands and said to hell with it all.”

The curse is underestimating the probability of negative events. “Now when great swaths of society are exposed to ever rising levels of financial risk . . . it’s completely inevitable that we’re going to see high levels of financial distress.”

Kilborn is speaking from a U.S. perspective, where chastened consumers have, unlike their Canadian counterparts, pulled back on spending. Of course, the American consumer was subsumed by the subprime mortgage crisis and a cataclysm of events that was largely avoided here. What the financial crisis did do broadly was play right into the hands of behavioural economists.

“One thing that’s special about this episode,” says Colin Camerer, a professor at the California Institute of Technology and a leader in the field of behavioural economics, “is that the conventional Chicago view was that perhaps some consumers make some smallish mistakes sometimes. But learning, competition, asking your neighbour . . . will kind of minimize the size and scope [of those mistakes.]”

That didn’t happen. “In terms of cognitive mistakes and huge financial consequences it was kind of equal opportunity,” Camerer says. “It wasn’t just consumers overstating their incomes and thinking house process could never fall. . . It was top executives in banks who earned these giant bonuses. A lot of them . . . had their own money tied up in the stock.”

So there were large-scale mistakes made, as Camerer says, by people who, according to standard economic theory, never make such mistakes. That is, the people hand-picked as the best and the brightest on Wall Street, some of whom found themselves dragged before Congress.

How were consumers expected to fare in, if not a free-money environment, certainly an easy-money environment here at home? “The idea that you can walk into a store with a piece of plastic — you may even be a college student with no income — and buy $5,000 worth of stuff is unbelievable,” Camerer continues. “Thinking like a neuroscientist, nothing in our brain evolution has equipped us to make the right decision in that case.”

The brain, in other words, isn’t really up to the task. “We’re not well equipped to say if I give this piece of plastic to this person and scribble my name, 10 years from now I might owe $67,000. It’s sort of a battle between this highly evolved acquisitive nature and the ability to imagine owing a lot of money years from now. The acquisitive nature part of the brain wins.”

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When he says “imagine owing,” Camerer is referring to the magic of compound interest. “We’re pretty good intuitively at linear extrapolation,” he says — if you pay $100 each year for 10 years how much will you have paid at the end of that period? “But we’re not very good at the numeracy of compound interest.”

The brain, poor thing, is additionally pitted against the continuous ingenuity of financial institutions. Camerer cites the example of Bank of America debit cards. “By definition a debit card is really supposed to protect against a lot of the problem with people running up credit card debts,” he says. “But what they were doing is letting it go below zero and charging a $35 fee for every [overdraft] transaction. So if I go to Starbucks and buy a latte and over to Borders to buy a book and the corner bakery to get a sandwich — ching, ching, ching.” (In March, the B of A announced it was ending the overdraft-on-debit-practice, or what The New York Times called the “$40 cup of coffee.”)

As an anthropologist, Gustav Peebles at The New School in New York City is thrilled that the mystery of humans and debt has taken us to his door. “Even though it sounds like something classically for the economists to study, it’s very much something we’ve been studying for decades,” he says.

Peebles talks of the way credit and debt — as opposed to barter — have bound societies together. How it’s inherent in the notion of dominance and hierarchy. How these “temporally binding relationships” emerge as an irony of capitalism. “Capitalism binds us together in this interesting way even though we think of it as this famously anonymous, fast-paced institution.”

Two years ago, Peebles authored a paper on the growth of banking systems in Western Europe in the early 19th century. The peasantry were deemed spendthrifts, as they kept their money in their mattresses, vulnerable, in the view of the bourgeoisie, to drunken blowouts.

The poor were entreated to be “diligent” by, as Peebles wrote, converting their tiny hoards into interest-bearing capital, while the banks were able to tap into a new source of investment money. “I call it a win-win covenant,” says Peebles. “What I’m really interested in is the way in which this win-win covenant is breaking down in some ways today, where it actually costs more money to bank than put it in your mattress.”

Along the way, regular folks have outsourced the skill of, say, financial management. “You’ve alienated your need to worry about tomorrow to an institution,” Peebles says, adding that many millennia ago “there was someone like me who actually knew how to make a knife or a spear.”

Georgia Pomeroy, a stand-in for drowning-in-debt consumers, has no financial acumen, no money skills. She harbours one dream: “to owe nothing to anyone.” As soon as the wedding is over, she puts the family home, freshly painted caliente red, up for sale. “1205 Shady Lane. Bring Your suitcase and move right in. Vibrantly hued 4BR. . . Owner will consider all reasonable offers. Let’s make a deal.”