Irving Fisher and Debt (fg)

Every student of Economics, at least one time during her studies, has stumbled over Irving Fisher's theory of debt deflation. One passage in his book, The Purchasing Power of Money (1911), resembles a behavioral approach to explain the build-up of debt:

The public psychology of going into debt for gain passes through several more or less distinct phases: (a) the lure of big prospective dividends or gains in income in the remote future; (b) the hope of selling at a profit, and realizing a capital gain in the immediate future; (c) the vogue of reckless promotions, taking advantage of the habituation of the public to great expectations; (d) the development of downright fraud, imposing on a public which had grown credulous and gullible (p.349)