This paper discusses what we have learned about the debt build-up in advanced societies over the past century. It shows that the extraordinary growth of aggregate debt in the past century was driven by the private sector.
To understand the driving forces of debt growth and financial instability, we have to study private borrowing, and in particular real estate lending. I also argue that the next frontier to understand the Great Leveraging is to open up the black box of aggregate data and exploit long-run micro data. I present first insights from a long-run micro dataset that allows us to study the distribution of debt over time, the changing borrowing behavior of different cohorts, as well as the sensitivity of different income groups to asset price fluctuations.