“The buyers think that what they’re buying will appreciate in value, making them rich in the future. The product grows more and more elaborate and more and more expensive, but the expense is offset by cheap credit provided by sellers who are eager to encourage buyers to buy. Buyers see that everyone else is taking on mounds of debt, and they’re more comfortable when they do so themselves. Besides, for a generation, the value of what they buy has gone up steadily. What could go wrong?
“Everything continues smoothly until, at some point, it doesn’t anymore. Yes, this sounds like the housing bubble, but I’m afraid it’s also sounding a lot like the still inflating higher education bubble. College is getting more expensive, a lot more expensive. At an annual growth rate of 7.4 percent a year, tuition has vastly outstripped the consumer price index of 3.8 percent. It’s skyrocketed past spiraling health care increases of 5.8 percent. Even the housing bubble at its runaway peak pales in comparison.