Buy now, pay later: It's been the mantra of American consumers for decades.
The results are obvious in the ballooning balances on credit cards and mortgage loans, and in the mushrooming US trade deficit, which reflects the nation's nearly insatiable appetite for cheap, imported goods.
Low interest rates, especially since the end of the 2001 recession, have fed the debt beast at home, allowing American consumers to accumulate nearly US$11 trillion in debt as they buy more homes, more cars, more clothes, more dinners out.
At the same time, foreign investment in the US is helping to keep the dollar strong, which holds down prices on those imports Americans covet.
But what would happen if interest rates suddenly weren't so benign, or if foreign governments, corporations and individuals stopped investing so heavily in America?
Some analysts fear such actions could trigger doomsday scenarios in which the bills come due and Americans can't pay.
The consequences could be devastating for the US economy.
Several experts were asked to discuss these potential disasters and to offer a rebuttal for those who believe that while the country may be in debt, it's not in danger.
CREDIT CARD CRUNCH
The tool that has made it ever so easy for Americans to buy and buy is the credit card. And buy they have.
Outstanding balances on credit cards have risen to more than US$800 billion, or some US$7,200 per US household.
It's more than double the indebtedness of a decade ago -- and it doesn't include an additional US$1.3 trillion in debt for cars, appliances and personal loans.
What if interest rates suddenly shot up, say 3 percentage points or 4 percentage points, requiring burdened borrowers to greatly increase the amounts they have to pay each month on their debt?
"It would undermine the housing market, and could quickly result in credit problems that would affect the entire [US] financial system," says Mark Zandi, who is the chief economist at Economy.com, a forecasting firm in suburban Philadelphia.
Such an event isn't beyond the realm of possibility if global investors, for instance, shift their money out of the US or if a terror attack riles financial markets.
Some American borrowers already are in trouble, and more are likely to stumble as interest rates rise and the new bankruptcy law makes it harder for consumers to be relieved of their debt, said Howard Dvorkin, head of Consolidated Credit Counseling Services Inc. in Fort Lauderdale, Florida.
"You'll see creditors get more aggressive at collecting debt, the reason being that they can," Dvorkin says.
That will turn many borrowers into "the walking wounded," struggling to keep up with card payments and limited in what they can buy -- a massive drag on the US economy.
THE REBUTTAL: Skeptics don't see a big economic shock in the offing. Economy.com's Zandi says interest rates are most likely to go up at a measured pace, giving most consumers time to adjust to higher payments, and some may see their credit limits cut.
Still, much of the recent debt has been taken on by lower-income and lower-middle-income families, who borrowed aggressively to maintain their standard of living as wages stagnated.
"Going forward it will be harder for them to maintain their spending -- and their living standards," Zandi says.
MORTGAGE MANIA
Americans have taken on more than US$8.8 trillion in mortgages to buy homes, up an astounding 42 percent since the recession in 2001.
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