I have a theory. I think you can predict the future of this nation by the junk mail we receive. Our mail box is generally filled with wonderful offers from companies across the nation offering us credit cards, loans, refinancing and occasionally even $10,000 for whatever we want. The back of the letter says we might even qualify for more once we go through the application process. We are continually offered debt as if it were the hottest new commodity on the market.
Apparently, many Americans are falling into this trap. And spending more than they are saving.
Yes, our phone company is offering us this wonderful phone for just six easy payments of $5. I'm sorry, but if you cannot write a check for $30, how are you possibly going to afford the phone bill?
Unfortunately, the problem is embedded deep within our national conscience. It is about Americans fixated on the present and the newest fad. It is about personal irresponsibility. But it is also about an active economic theory developed in the Great Depression which has taken hold of the economic policies of both the major parties: that of John Maynard Keynes.
In his revolutionary work, The General Theory of Employment Interest and Money (p. 379) he writes,
It is highlighted in a statement (pdf) made by Alan B. Krueger of Princeton University before the Budget Committee of the US Senate after 9/11:
Update: Thanks for the link Henry and Bruggie Tales! Here is a brief video about a radical new concept in avoiding debt:
Related Tags: debt, Keynes, consumer spending
Apparently, many Americans are falling into this trap. And spending more than they are saving.
Last year [2005], that rate sank to -0.5%. Households spent $41.6 billion more than they earned. The rate's last dip into negative territory was in 1933, when banks were closed and breadlines were long. In January, the savings rate fell further, to -0.7%. USA TodayWhile there are some problems with the statistics, they paint a pretty dire picture for the future of this nation. One that makes this look attractive to someone out there:
Yes, our phone company is offering us this wonderful phone for just six easy payments of $5. I'm sorry, but if you cannot write a check for $30, how are you possibly going to afford the phone bill?Unfortunately, the problem is embedded deep within our national conscience. It is about Americans fixated on the present and the newest fad. It is about personal irresponsibility. But it is also about an active economic theory developed in the Great Depression which has taken hold of the economic policies of both the major parties: that of John Maynard Keynes.
In his revolutionary work, The General Theory of Employment Interest and Money (p. 379) he writes,
...apart from the necessity of central controls to bring about an adjustment between the propensity to consume and the inducement to invest, there is no more reason to socialize economic life than there was before.In other words, it is the duty of government to stimulate spending and investment.
It is highlighted in a statement (pdf) made by Alan B. Krueger of Princeton University before the Budget Committee of the US Senate after 9/11:
The main short-run economic concern, in my opinion, is that the terrorist attacks will cause a quick and sharp contraction in consumer spending.And in various speeches by the President, such as this one in 2003 in which he outlines the purposes of his economic policy:
The jobs and growth proposals I've outlined today are a focused plan to encourage consumer spending...It seems to be working. And we are spending more than we are earning, hastening our slide into servitude.
Update: Thanks for the link Henry and Bruggie Tales! Here is a brief video about a radical new concept in avoiding debt:
Related Tags: debt, Keynes, consumer spending
