Just last week, Equifax Canada, a credit reporting agency, revealed that the total outstanding consumer debt in Canada had increased 3.6% over the course of a one-year period. At the end of September 2015, Canadian consumers owed 1.587 trillion dollars in debt. By the end of September 2016, that number had risen to 1.702 trillion dollars. Cf. http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/more-canadians-going-bust-as-consumer-debt-surges-36/article33235495/. The increase of 3.6%, while sounding small, actually involved a net increase in outstanding debt of 115 billion dollars. Please note that we are NOT told how much consumer debt was written off as bad debt during the same period. If that debt had not been wiped out, the total amount owing would undoubtedly have been even greater.
The steady increase in outstanding consumer debt occurs because there is insufficient consumer income to purchase all that is on offer in the economy. Relatively lower interest rates merely facilitate the increase; it is not its fundamental cause as the article seems to suggest. When people do not have sufficient money to purchase the goods and services that are available and that answer to some need or want, they can nevertheless obtain the goods if they are able and willing to pledge their future incomes as collateral for additional credit in the present. It must be stressed that this credit, which is obtained from private banks in the form of lines of credit, personal loans, credit cards, mortgages, student loans, car loans, installment buying programmes, etc., is, like the bulk of the money supply, created out of nothing in the form of intangible numbers and issued as an interest-bearing debt. Consumers who borrow are not borrowing from the rich with the bank acting as an intermediary; they are borrowing the money into existence directly from the bank as a money-creating agency. Consumer credit therefore represents an injection of new or additional money for the economy, money the economy desperately needs if it is to stave off recession or worse.