According to equitablegrowth.org, in today's America we find that "…the wealthiest 1 percent of families in the United States holding about 40 percent of all wealth and the bottom 90 percent of families holding less than one-quarter of all wealth." This is especially problematic because the unemployment rate as measured by the United States, is at 50-year lows, of which, normally a very low unemployment rate, would have a tendency to be inflationary, because it would typically necessitate the increasing of wages because of the competition for that labor, but this has not occurred; so that, in actuality, the income gains for those that are in the bottom 90 percent of household income, are marginable, at best, and are falling further and further behind those at the top.
When the lion's share of wealth and income are held in the hands of the very few, this thus necessitates in order for the economy to grow at all, that those that are lacking in income and household wealth, are required to avail themselves of the necessity to borrow money through all the conventional means at hand, in order to get access to the household goods so desired, such as housing, vehicles, food, entertainment, and for those that are in the educational phase of their life, education. In order to borrow money, the credit worthiness of those that are borrowing is determined, and from there loans are structured in a manner in which an appropriate interest rate is charged.
The main difficulty that people that are borrowing money have is that when their income is already stretched in order to stay current on the bills that they have to address each and every month, in which, additionally they are responsible for paying interest and/or fees on those monies so borrowed, is that the debt that they have to deal with, seemingly places them into a position in which, though it may be current, it is susceptible to becoming delinquent, if something untoward happens, or simply because their monetary budget never allows them to ever get ahead of the curve.
That is to say, often those that borrow money, borrow that money under the hope that their income will grow so as to accommodate any interest payments or fees so generated from the borrowing of that money; but when their income growth is actually consistently less than expected, and therefore less than the interest payments or fees that they have incurred, then sooner or later, the debt bubble that has been created is going to burst.
The bursting of debt bubbles isn't good for either the lender or the borrower, because the lender may or may not have secured the money so lent, with enough collateral to recover from the borrower enough in assets to thereby be made whole. So then, in those cases, in which there is little or nothing to recover, the lender of that money has fundamentally lost that money, and though such a lender, may thereupon restructure such loans so as to present the façade that those loans are still good, they essentially are not. This thus means, that when there are millions upon millions of borrowers, that simply are not ever going to be able to pay back their loans in whole, and the underlying asset to that loan is significantly below the value of those loans, than financial institutions, even those of long standing, are vulnerable to collapse, and such a collapse, done on a large enough scale, can bring the entire financial edifice down.