The End of a Credit Cycle?

The Washington Post reports:

We are at the end of the credit boom -- certainly the six-year boom and maybe the 60-year boom. Has any society ever created so many ways for people to go into hock? In 2003 Americans had 1.46 billion credit cards, or five per person. Home mortgages total $9 trillion, and some initially don't require borrowers to repay all their annual interest. In 1946 households had 22 cents of debt for each dollar of disposable income. Now they have $1.26. Behind these numbers lies a profound social upheaval: the "democratization" of debt. Everyone gets to borrow. But this process may have reached its limits.

Although Americans are routinely stigmatized as credit junkies, that's unfair. Of course some people overborrow, and some financial institutions lend abusively. Still, the democratization of debt has generally been a good thing. Millions of families can now borrow for college, cars and clothes. The biggest boon has been the expansion of homeownership, up from 44 percent of households in 1940 to 69 percent today. (Three-quarters of household debt consists of mortgages.) At heart, Americans' appetite for credit reflects national optimism. We presume that today's debts can be repaid because tomorrow's incomes will be higher.

Is deflation coming?