Conventional economic theory assumes that households and businesses will always borrow when credit is made available and they have the cash flow to service debt. As debt levels expand, asset prices and economic activity rise along for the ride. But once an economic shock hits, financial bubbles burst, asset prices plunge and debt levels become a crushing weight. In this environment, financial vulnerability is writ large and priorities shift to selling assets and reducing expenditures in order to pay down debt and repair balance sheets.
This behaviour shift dominated developed economies after the financial crash