How the mighty are fallen! Northern Rock's fall from grace this week has been swift, calamitous and probably terminal. But what are we to make of the startling sight of apparently sane citizens queuing round corners from five in the morning angrily demanding their precious life savings?

The papers and airwaves have been full of soothing words from the Chancellor and the Bank of England. "Panic not, savers and borrowers. Your money is safe in our hands." And yes, the Government has now agreed to underwrite every penny of customers' savings. So is this just an aberration, a 'rotten apple' of a bank - or a financial system which is rotten to the core? Once the panic is over, will it be back to life as normal?

But hang on, what is this 'life as normal'? Mortgaged up to the hilt, overwhelmed by easy credit, we are now the household debtors of Europe. The past decade has seen a huge mushrooming in household debt across the UK.

The amount we collectively owe to banks and building societies now stands at £1.3 trillion. This debt has fuelled the consumer boom that has helped the economy to grow and showered untold wealth on the money-men of the City of London. But at what cost?

The truth is that Northern Rock has not been alone in banking on irresponsible lending practices. We have been encouraged from all sides to take on mortgages and debts to the limit. Credit has become big business - and hugely profitable for the banks.

We've been lured at every turn and every possible opportunity with promises of 'buy now, pay later'; instant credit; 0% balance transfers; 133% mortgages; interest-only mortgages; daytime TV advertising; blanket junk mail advertising; telephone advertising; affinity-cards with every conceivable partner.

Seemingly everyone from Christian Aid and Manchester City FC to British Gas and the National Trust has got in on the act of making money from selling credit to those who should know better. But there must come a point at which ever-higher levels of debt cannot be sustained.

Ann Pettifor, chief architect of Jubilee 2000 - which opened all our eyes to the unsustainable nature of Third-World debt - recently turned her attention to the perils of the rich nations' debt mountain. Published in 2006, her book 'The Coming First-World Debt Crisis' predicted a time in the not-too-distant future when the so-called First-World economies will be mired in the levels of debt that have wrought such havoc on the economies of the so-called Third-World since the 1980s.

This debt crisis will hurt millions of ordinary borrowers and inflict prolonged dislocation, economic, social and personal pain on those largely ignorant of the causes of the crisis, and innocent of responsibility for it. Sadly, and all too soon, her prophecy appears to be coming to pass.

Whilst Northern Rock customers' immediate financial concerns may have been eased, it is already clear that some will have to pay a price for the wider 'credit crunch' which has proved the Rock's downfall.

Citizens Advice revealed only last week that money and debt problems are now their number one problem, with 1.7 million people seeking help with debt problems last year - up 20 per cent on the year. Debt places intolerable strain on health, well-being and family life. According to Relate, it is money (not sex), which is the biggest cause of relationship breakdown.

As the cost of the 'credit crunch' filters through to consumers in the form of higher interest rates and tighter credit limits, it is those who are already struggling to make ends meet who are likely to be the biggest losers. Insolvencies and repossessions have rapidly increased over the past two years, and are likely to push up still further.

And many of the poorest in society will be forced into the hands of the more unscrupulous lenders who are willing to lend to those whom others judge to be too high a credit 'risk'. Provident Financial is just one such 'sub-prime' lender who recently introduced the Vanquis credit card targeted specifically at those with a poor credit history - at the cool annual percentage rate of up to 40 per cent.

The truth is we have been sold a lie. Money is not the route to happiness. We have become fixated on the belief that home ownership and consumerism - fuelled by ever increasing levels of debt - are the route to health, wealth and happiness.

To be sure, until the credit crunch burst their bubble, many of those who make money out of money have been laughing all the way to the bank. But for countless others, debt is the first step on the road to disaster. Money can be an incredible force for good - and evil - but one thing is certain: you can't take it with you.