From the Editors

Everyone knows that debt is a sin. The Bible says so (Matthew 6:12: "And forgive us our debts, as we forgive our debtors"). Debtors used to go to prison; now they lose their credit and their homes. Ever since the proliferation of shoddy mortgages helped touch off the Great Recession, consumers and governments both here and abroad have been scrambling to shed their debt. An act of virtue, any moral philosopher would tell you. But what if everybody did it? Simultaneously?

Be careful what you wish for.

This edition of The Next Economy, produced jointly by The Atlantic and National Journal, is all about debt. The subject couldn't be timelier, as Washington's anguish over controlling the federal deficit will provide a context for the election year to come. That's what we have tried to do here — provide a context. The articles inside take a deeper look at debt, far into the past and into the future. Are we in over our heads? What'll happen if we are? The answers may surprise you.

The cover story explores what a deleveraged America might look like. Ugly, more likely than not. If consumers do the right thing and government does the same, as Harris Collingwood learns, we can expect subpar growth, more unemployment, and a national psychology to match. And yet we can't keep doing what we've done. As Harvard economist Kenneth Rogoff argues, it's the overhang of debt, private and public, that has kept the economy in the ditch.

Yes, the proliferation of debt in every sector of the economy is frighteningly obvious. But debt isn't always a terrible thing. It depends, Kirstin Downey concludes in an eye-opening sweep through history, on how the borrowed money is spent. When ancient Romans and modern Americans built roads, the investment paid off; when Spain and Byzantium and the Aztecs exhausted their treasuries, their empires fell. In the United States, the federal government has always been in debt except for a year or two in the mid-1830s. Yet only when it symbolizes a government out of control, Ronald Brownstein finds, has the electorate risen up in disgust.

So, how much danger are we in? Need we fear that China holds too much of our debt? Not really, James Fallows reports. Still, the notion of debt as an evil persists — and ought to, for our individual sakes. Alina Tugend tells us how to get out of debt and stay out. Even if what's good for each of us isn't good for all of us.