Debt and GDP

This graph haunts my days and nights. It compares the ratio of total U.S. debt (credit) versus U.S. GDP (Gross Domestic Product). It spiked off its norm during the Depression because of a fall in GDP (not a rise in debt) and has bounced in a stable range below 200% (the green circle) until the middle 1980's when it shot up and continues to climb (the red circle).
Imagine you deal only in cash, your twin deals in debt. (Remember, he may be doing this for a good reason. If he thinks he can borrow for 4% and buy an asset that will grow at 10% he will gain 6% a year.) You both make $100,000 a year. So you save your money and buy a $50,000 house for cash; your twin takes his $50,000 and uses it as a down payment for a $350,000 house. Amazingly, both your house and his debt-financed house are classified as assets, as growth in the GDP. He looks rich but his debt ($300,000) and yours ($0) are both maintained by the same income, $100,000. You have $100,000 to provide basics, invest, consume; your twin has a large interest bill which comes out of his income first. You are China; your twin is us. If he buys more, or if the interest rate rises, more and more of his income gets shunted to interest payments.What this graph shows is that debt is growing steadily, climbing until it is unsustainable.
At some point only three possibilities exist: Default on the debt, pay down the debt (which means a fire sale in assets or a contraction in spending elsewhere), or inflate the currency the debt is paid in. All those options will result in economic, and probably social, chaos.