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August 18, 2011

Income Inequality Fuels Borrowing Cycle

Just as many Americans had started to pay down debts racked up before and during the recession that began in 2008, a new wave of economic trouble is hitting the country. Now, more people are facing layoffs and challenges that may make it difficult to continue to work their way out of debt.

More people are borrowing money again, as they did in droves before the economic crash three years ago. The gap between the rich and the rest of America also continues to grow, so many economists predict that ordinary Americans will borrow more money to try to ‘keep up’ with their wealthier counterparts.

In the meantime, home foreclosures continue to plague many and middle-income Americans’ salaries aren’t keeping up with rising costs. To economists, that equation adds up to a possible repeat of the borrowing problem that led to the most recent recession.

Warm Up Questions

1. What does the term ‘wealth gap’ mean to you?

2. What is credit? How does a credit card work?

3. Name some factors that led to the economic crash of 2008.

Discussion Questions

1. Do you see a solution to the borrowing cycle described in this video? What do you think needs to change to keep people from borrowing more money than they can pay back?

2. Have you ever borrowed money? If so, what for? What do you think are good and bad reasons to borrow money?

3. According to the video, what are the main differences between Americans’ lifestyles and borrowing habits after World War II and today?

Additional Resources

Video Transcript

The Income Inequality Quiz

Making Sense with Paul Solman

Download this Video

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