c) A growing economy with retained net worth can sustain higher debt levels
What net worth? We have systematically dismantled our productive capacity and replaced it with service industries.
As financial markets become more efficient in the 1980's and after, consumer and business debt increased. The efficiency and lower debt costs from mortgage-backed securities, consumer debt pools, and other structures took consumers directly to the credit markets.
And now that debt market has imploded, time for them to update their cheat sheet. Basically what the sheet implies is that 3000 sqft tract mansions with granite countertops are a good enough reason to hock the future. I would ask them, where is the productive capacity to pay back the debt? The more I read about stuff like this, the more I believe in inflation will be choice of remedies.
Manufacturing has suffered due to technology advances, automation and productivity increases.
On the housing side, much more pain needs to realized to clear the excesses from the system.