This Black Friday broke an all time record. Where do all these people get the money to spend, spend, spend if the economy is so bad?
This Black Friday broke an all time record. Where do all these people get the money to spend, spend, spend if the economy is so bad?
Isn't this what the economy needs?
oiuoiu wrote:
Isn't this what the economy needs?
No. An economy built on massive consumer debt is how we got in this mess in the first place. During the Depression, people saved what they could.
Consumer Culture wrote:
oiuoiu wrote:Isn't this what the economy needs?
No. An economy built on massive consumer debt is how we got in this mess in the first place. During the Depression, people saved what they could.
So you're suggesting we take macroeconomics tips from the Depression?
Middle-class consumers are badly misdirected as a result of government policies designed to resist recession by encouraging irresponsible spending. But all of that will change when Americans lose access to the global credit markets in the near future. Tragically, most people simply do not understand how dire the country's economic situation is and how bad things are going to get over the next few years after foreigners stop propping up the USD. If consumers were aware of what the future holds, they would be saving every penny and buying precious metals instead of iPads.
If the USD was to crash we would suddenly become competitive vs. China in manufacturing, unless they kept trying to tie their currency to USD, in which case China might actually run out of money. Anyway, it's not as simple as you seem to think.
People are probably not spending outside of their means at this point.
Rational Economics wrote:
If consumers were aware of what the future holds, they would be saving every penny and buying precious metals instead of iPads.
So, I'm not sure how that creates jobs or stimulates the economy. You're saying I shouldn't buy anything aside from the bare essentials, save everything (except for what I spend on bare essentials...of course), and collect gold? How does that help anything? Really, I don't know. Please explain.
The classic paradox. I am saving to pay off debt, and then I am going to save and only borrow for a home. I am saving, but I am glad other people are spending.
That is what we need everyone else to spend.
Azaleas wrote:
If the USD was to crash we would suddenly become competitive vs. China in manufacturing, unless they kept trying to tie their currency to USD, in which case China might actually run out of money. Anyway, it's not as simple as you seem to think.
People are probably not spending outside of their means at this point.
The collapse of the dollar will NOT make American manufacturing competitive; it will only create a favorable environment of exports. But even with that environment in place, regaining our manufacturing prowess is largely a matter of rebuilding our factories from the ground up. Much of the existing equipment is now obsolete. What's more, the process of rebuilding America's industrial infrastructure will also obstructed by leftists who won't get it until the economy hits rock bottom and their lives become so unlivable that a dangerous, low-paying factory job seems attractive to them. Things are going to get very, very dark in this country before they get better, and many people are going to die in the process.
Better spend it before Obama takes it
oiuoiu wrote:
So, I'm not sure how that creates jobs or stimulates the economy. You're saying I shouldn't buy anything aside from the bare essentials, save everything (except for what I spend on bare essentials...of course), and collect gold? How does that help anything? Really, I don't know. Please explain.
When you save your money in the bank, you participate in capital formation. Investment capital is a requirement for economic growth.
When you stop buying imported consumer goods that you don't need and can't really afford (like plasma TVs), you send a signal to the market that the businesses who sell those products (retailers) need to reduce supply. Those unproductive resources can then be liquidated and redirected away from the service sector toward areas of the economy where they are really needed, like manufacturing, agriculture and energy. Short-term job losses in the industries associated with the bubble are required to support long-term, healthy economic growth in productive industries.
Spending money on gold has the same effect as spending money on anything else. Your purchase will allow people who used to work for minimum wage at Best Buy to get better jobs as gold miners.
too many dumb comments here.
first thought: if all consumers saved their money and spent it only on complete necessities, it would only plunge our economy further into recession. thats extremely basic macroeconomics. so that would actually be bad for our economy.
second thought: obama is not proposing taking your money. he is proposing the idea of forcing the top 1% to actually pay their taxes in their entirety, by disallowing tax breaks for these people that absolutely do not need them.
third thought: i think this black friday record shows that more and more people are willing to go to greater lengths to save money but still get those items that may be luxury goods. in my opinion, this may be a good sign. it means the majority of people have not been forced to cut back to pure essentials and are still looking to purchase luxury goods, but at the same time are trying to ease their own debt. all this sounds okay to me.
We are helping our Red Chinese brethren.
errryep wrote:
too many dumb comments here.
first thought: if all consumers saved their money and spent it only on complete necessities, it would only plunge our economy further into recession. thats extremely basic macroeconomics. so that would actually be bad for our economy.
This kind of short-range thinking is exactly what is leading America over an economic cliff and toward a final outcome much worse than the recession that we should have experienced in 2008. Encouraging irresponsible spending to preserve the jobs of the bubble only ensures economic Armageddon when consumers finally exhaust all savings and all available sources of credit. Because we have refused to accept a short-term recession, we have delivered ourselves to the doorstep of total economic ruin.
The american economy has been "terrible" because people haven't been spending as much money. If those people are then spending in record amounts when companies are deeply discounting merchandise, that is good for the consumer and not so good for the companies.
Next week the companies will be whining that they SOLD a lot but didn't MAKE a lot.
Over 20 tax cuts from Obama and you're worried about him taking it? Then you must be in the top 2 percent of income, but in that case you could not possibly worry that if he took another 3 percent of your income you would have any significant financial problems.
92 percent are still working wrote:
The american economy has been "terrible" because people haven't been spending as much money. If those people are then spending in record amounts when companies are deeply discounting merchandise, that is good for the consumer and not so good for the companies.
Next week the companies will be whining that they SOLD a lot but didn't MAKE a lot.
Wrong. The American economy is terrible because it was rendered dependent on irresponsible consumer spending in the first place. We should have had prosperity as a result of industrial progress, but instead we de-industrialized and allowed Asians to take up the slack while we abdicated all personal responsibility and became a country of lawyers, burger flippers and public school teachers. We could have had the greatest economy in the history of the world, but we blew it all because we rejected capitalism.
Rational Economics wrote:
When you save your money in the bank, you participate in capital formation. Investment capital is a requirement for economic growth.
When you stop buying imported consumer goods that you don't need and can't really afford (like plasma TVs), you send a signal to the market that the businesses who sell those products (retailers) need to reduce supply. Those unproductive resources can then be liquidated and redirected away from the service sector toward areas of the economy where they are really needed, like manufacturing, agriculture and energy. Short-term job losses in the industries associated with the bubble are required to support long-term, healthy economic growth in productive industries.
Spending money on gold has the same effect as spending money on anything else. Your purchase will allow people who used to work for minimum wage at Best Buy to get better jobs as gold miners.
Let's go step by step.
1. "When you save your money in the bank, you participate in capital formation. Investment capital is a requirement for economic growth." You are right, saving is required for economic growth. But "saving" is a somewhat ambiguous term. You can save money by stuffing cash or gold under your mattress, or by buying certificates of deposit, or by depositing cash in a savings account, or by buying stocks and bonds, or even by lending money to your cousin Jimmy to start a pawn shop. Each type of saving and investing will have a different impact on the economy. Putting cash under your mattress will have the same impact as buying gold, or as putting your tractor in your barn for safe keeping. Each will idol resources that could be used for more productive purposes.
2. Who says I can't afford an imported plasma tv? If everyone only bought what they needed, we would not have any economic growth (except that which would match population growth, which is 1.1% globally). If you're like me, you consider culture a necessity (even trash like Justin Bieber and Lady Gaga has cultural value). I don't live to work or work to live. If I can enjoy myself and relate to other people through television, then I will place a value above the $1000 I spend on the set. Life is not just about getting by. Increasing our quality of life and having a society that we can enjoy means spending money on things beyond what is necessary for subsistence.
3. How do you know that resources need to be redirected towards manufacturing, agriculture, and energy? Global food prices can be lowered if foreign countries (particularly Asian countries) liberalized their food policies (by ending price fixing and tariffs). The US could end its subsidies of food, but that would only lead to fewer resources being devoted to agriculture. Nothing the US could do could significantly boost manufacturing or energy production.
4. "Short-term job losses in the industries associated with the bubble are required to support long-term, healthy economic growth in productive industries." You're sounding like a communist by saying some industries are "productive" and some aren't. Believe or not, but the financial services industry is highly productive, as is the tanning salon industry and the entertainment industry.
5. "Spending money on gold has the same effect as spending money on anything else. Your purchase will allow people who used to work for minimum wage at Best Buy to get better jobs as gold miners." This is rich. If you think the Fed can't get us out of the recession by printing money, then why do you think people mining gold would? It is essentially the same thing. The Fed is actually far more efficient at creating money than gold miners are. The Fed needs to pay one guy to push a button to create money. A gold mining company has to pay thousand to go out into the mountains and blast away a million tons of rock just to find a few flakes of gold dust. That gold isn't going to make anything. It isn't going to make plants grow or program the next Google. You can't drive your gold to work, or sleep in it at night. When people buy things, they do it to make their lives better. As a fellow capitalist, I hope you understand that MOST of the time people know what makes them happy.
It mostly was the occupy movement buying tents and supplies.
The Federal Reserve and the banking system is effectively doing an extortion racket on the American people. Saving money is like losing money because saving accounts give back 0% interest while inflation runs around 2-3%. It creates a situation where banks are practically forcing people to spend.
That is one big reason among other reasons.