"if people waited until they could afford things it would destroy this economy"

[Deja Q]

Interesting quote I once heard.

Our economy is about the flowing of money...

Do you agree or disagree?

[Arctic Dave]

1. Our economy is about the access of easy credit.

If people made decent wages they could "buy" goods. All we do now is finance goods.

[baldguy]

2. Our economy is built on the illusion of credit.

[madrchsod]

3. all civilizations depend on the flow of goods and services

it`s the balance that determines the outcome.

[mdmc]

4. an economy that is too big to fail

is too big to continue existing..

[MadMaddie]

5. Our grandparents and even some of our parents didn't

spend money unless they had it. I totally disagree with this premise.

We have just witnessed n entire economy based on an unregulated Credit Industry=Epic Fail.

Even with regulation people should be spending within their means.

[Liberal_in_LA]

6. agreed. An economy can exist without everyone being up to their necks in debt.

[Donnachaidh]

28. yeah, but the banks depend on people shackling themselves to debt for YEARS

And people are finally waking up to the plastic serfdom and just how BAD it is for them. Americans don't need to work for the company store called Bank of America (or any other bank name you want to fill in the space).

If the banks can't survive without sucking people dry -- then let the banks DIE.

[Liberal_in_LA]

38. Yeah, that's how the banks survive NOW, but 30-40 years ago it wasn't true

Businesses flourished without needing people to chain themselves to debt.

[Donnachaidh]

44. I know -- I worked for a bank back then.

People weren't brainwashed into thinking they could have the *good life* if they charged everything to be paid later.

[eleny]

7. Same with my family

Hubby's family, too. So we can't stand having any kind of loan. Just doing our part to ruin the country, I guess.

But those were different times. I never knew anybody who had a credit card when I was growing up. Maybe there was American Express and that was so exotic. Hopefully, people will wake up and amend their collective ways to where they use common sense.

[konnichi wa]

20. If you apply that standard to the current administration, either you or they will be

sorely disappointed.

Just sayin'

[JI7]

23. i don't think credit cards were used as much in our grandparents days

[Donnachaidh]

29. no they weren't. They were for EMERGENCY use only.

And even then, they were the first things paid off.

Now, the banks offer credit, and tell you it's good for emergencies, but they WANT you to spend. They WANT that 30 per cent they tack on. And, quite frankly, young adults today think an *emergency* is anything they want. It happens when you grow up in the GIMMEE society we've become. :shrug:

[Liberal In Texas]

39. In my grandparents days, there were no such thing as credit cards.

It was the first Republican Great Depression. Nobody but nobody had even heard of a credit card.

[SoCalDem]

8. Macro v micro

Micro USED to work just fine.. there WERE businesses, but they were usually dedicated to actually MAKING something..something that was marketable & needed.. If they made too many, they sold the excess abroad..

Apart from the "super-cities". most of the US was "small to mid sized" communities..

As different from one another as they were, they all had a common make up..

1. a downtown
2. surrounding farm communities
3. a manufacturing section

Most communities OWNED & operated their own power generation, sewage treatment & water delivery systems..the communites HIRED people to operate them, and the costs were kept to a minimum for the people of the communities. The cost to build & operate them were borne by all the taxpayers in the community.

Every small town had its own shoe stores, office supply stores, family-owned department stores, drug stores (that delivered), toy stores, grocery stores, restaurants, furniture stores, banks, a post office, doctors, dentists, teachers ...you name it, they had it..

Money EARNED in the community was SPENT in the same community and circulated between the people of THAT community.. Sure, there were times when a trip to the "big city", was in order, but for the most part, the money stayed put..within the same place it was earned.

Except for the war years, people always seemed to have what they needed and wanted, and even people of modest means could own a home, send their kids to college, buy cars, eat out, go to movies, buy clothing, buy groceries, etc.

Until the merger-mania hit, and "bigger-is-better" took off, people did just fine.

EZCredit ruined America..just like it did in the 30's.

It was all written up, and there for the studying, but no one paid attention..and so we repeat it again.. The difference this time?

The REST of the world is no longer backward, hungering for American-made goods like they used to..

[dgibby]

10. Excellent synopsis of the situation.

[Vidar]

15. Good analysis.

[bbinacan]

9. It depends on what "things".

House or car. These need to be bought on credit or it could take years for one to be able to pay cash.

[marketcrazy1]

16. the problem is wages

wages have not kept pace with inflation. in the late sixties you could buy a NEW car for 3 grand or less! a new home cost 2 or 3 times average yearly income or less!. my older brother paid cash for the first brand new car he ever owned in 1972 I think he paid around 3600 bucks! nearly a half century of price inflation with only modest wage growth by comparison. WAGES are the problem. inflation is just another term for wealth insurance at the expense of the common man.................

[bbinacan]

19. Do you have a link

that shows inflation vs. wage growth? Thanks in advance.

[sendero]

11. Using credit..

... can be a good thing if done prudently. However, Americans went on a spending spree in the 2000s - I don't really understand why.

But here is a chart. It's not just the "subprime crisis" or the "housing bubble" that has the economy hobbled, it is a mountain of debt at all levels, government, corporate and consumer.

http://efinancedirectory.com/articles/Study:_America's_Reliance_on_Home_Equity_Loans_and_Credit_Cards.html

[bemildred]

12. Maybe this is not the sort of economy that we want or need then?

Maybe we need an economy that can support people waiting until they can afford things?

[handmade34]

13. yes, that is correct...

it would destroy the economy as we know it today. Time for a new and improved economy. We need to develop a progressive 21st Think Tank... develop a new and improved economy without usury and with ethics.

[kentuck]

14. More or less, this is the conversation that George Will and Robert Reich had this morning

on This Week. They were discussing how people were saving more now than in a very long time. But that they needed to be spending. Reich made the observation that we could never go back to the same economy we had in the past, with the easy credit and all. And nobody really knows what the new economy will look like.

[Mike 03]

17. Yes, I agree. Impulsivity is part of the American Spirit, and impuslive spending is rampant and a

huge boon for banks, credit card companies and ATM machines.

I'm not saying this is Good; merely, this is true.

[stlsaxman]

18. Debt IS wealth! "I live in a $359K house- I MUST be rich!"

:eyes:

In my best Roger Hodgson voice: "Dreamer... silly little dreamer..."

[lunatica]

21. So how and where would doctors become doctors without debt?

Or lawyers, or journalists or scientists who pursued their PhDs while doing ground breaking research for paltry wages. People wouldn't be able to get their Masters, much less their Doctorates without massive debt. It's not uncommon to rack up student debts of 50 to 80 thousand dollars. Even getting a Bachelor's degree will put people in debt for years.

[Badgerman]

22. NOTHING you named is CONSUMER debt...which is the whol;e point! n/t

[konnichi wa]

24. Doctors and lawyers aren't consumers??

Wow, I learn something every day around here.

[Badgerman]

26. PHD's aren't trinkets and junk from Wal-Mart! sheesh!

This thread is about excessive or unnecessary consumption using future earnings. Odd that you would fail to see that distinction.

[handmade34]

31. consumer debt

is anything we purchase with credit, whether a degree from Harvard or a DVD from WalMart.

[JI7]

27. i think he is saying it's different from debt on things like luxury goods

[Fire_Medic_Dave]

41. The military is a good way to become a doctor without any debt.

I went to college on a vocational rehab program from the military. My wife just finished her PhD without any student loans or debt.

David

[cap]

43. we all can't join the military to get an education...

it's an individual solution to a problem but not one for every kid who wants a college education.

[Fire_Medic_Dave]

49. As I said my wife just finished her PhD without any debt and without the military.

and besides I never said that was the only way. I just answered a question about how one could do it.


David

[nadinbrzezinski]

47. Here is another suggestion

how about education be free all the way to a PhD... other countries do fine

By the by, this is not what consumerism is based upon... just simply spending on shlock

[lunatica]

48. Once you owe that much for your students loans then everything you buy is

over the top consumer spending, because there's no way to pay off your loans before you can buy what you need to live.

[nadinbrzezinski]

50. It is not consumerism

and that is the point

The other point is that we should value education and have it available to anybody who can and should go to college. Problem is we as a society do not value education, we value consumerism. Why it is easy to confuse it.

[rucky]

25. Our economy - yes. A real economy - no.

[mtf80123]

30. the problem is.....

Since Ronnie Raygun, our economy shifted from Demand to Supply side economics.

[handmade34]

32. astute

...we will produce it and make them want it! Bad Economy!

[JI7]

33. Supply Side makes no sense to me

how could so many fall for it.

[NashVegas]

34. It's True - For More Reasons That They'll Say - But Only in the Short Term

It's not just a matter of not buying as many Things, it's also a matter of consumers having a nice little pile of "fuck you" money.

I'm convinced that a population in debt risks its moral compass. ie, turns a blind eye to unethical behavior - and there's a TON of it in the marketplace - out of fears of financial hardship.

[nadinbrzezinski]

35. Consumerism is what drives our economy

some confuse it with capitalism, not the same thing

And yes, you are correct

[Vickers]

36. More than it is already?

:shrug:

[MasonJar]

37. Perhaps in this phony next quarter profit driven economy, but Americans

used to save up and buy things when they could afford them. I think even Tom Brokaw called them the great generation.

[Fire_Medic_Dave]

40. Horrible stupid idea that created the mess we are in now.

[pnutbutr]

42. fiat money

relies on confidence and credit to function so yes if nobody took out lines of credit to keep the money moving it would kill our economy.

[Javaman]

45. How about raising peoples wages to match the cost of living thus

allowing them to afford things.

[Hannah Bell]

46. yes, it's money flow. that's the meaning of the saying, "in a depression,

money returns to its rightful owners."

workers' wages (as a population) don't add up to enough to buy back the goods & services they produce.

capitalists are too few to *need* to buy back the excess production the workers can't afford to buy.

the gap is bridged by the circulation of money: loans, gov't spending, new investment.

when $ flow slows, the gap becomes obvious.