How Thomas Piketty and Elizabeth Warren Demolished the Conventional Wisdom on Debt

In a 2006 Saturday Night Live sketch, Chris Parnell sums up the conventional wisdom about credit card debt:

Did you know millions of Americans live with debt they can not control? That's why I've developed this unique new program for managing your debt. It's called Don't Buy Stuff You Can't Afford.

According to the prevailing story, debt is caused by lavish and irresponsible spending by poor and middle-class families. But like much "conventional wisdom," an increasing amount of evidence belies this point. In fact, the decline of saving and the rise of debt was an almost inevitable consequence of families trying to scrape by in the face of rising inequality. This is the corollary of French economist Thomas Piketty's now-famous observation: While capital is increasingly concentrated at the top, it turns out that debt is becoming concentrated at the bottom.