The level of household debt held by Canadians is a frequent topic of discussion but in the past week there has been a lot of discussion among economists about whether it’s a concern or not. The debate was sparked by a report from Philip Cross of the Fraser Institute who noted that low interest rates made household debt affordable and said that the concern was overstated. David Madani of Capital Economics responded by saying that the report was “misleading” for focusing on the servicing of the debt, including mortgages at current low rates, whereas the real concern is the volume of debt and the potential for higher interest rates to make it unaffordable down the line.

Taking something of a middle ground position is Jeffrey Schwartz, executive director of Consolidated Debt Counselling Services of Canada. Writing in the Huffington Post he says that he agrees with much of what Philip Cross said but is concerned about the message it sends. Schwartz says that there is already a lot of encouragement for Canadians to take on debt, not least the low interest rates and that “having an authoritative voice telling us it’s fine” may not be a good thing. However he agrees with Cross’ note that debt is being used to create wealth and says that staying away from bad debt is his advice too. In other words debt that is used to pay for an appreciating asset is very different from a credit card being used to pay for a meal. 

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