Why is it good to have consumers spend money...

[0marTheZealot]

Originally posted by: vi edit
When people spend money states/local governments collect taxes on sales (assuming you didn't buy online and skirt around them). And when you buy stuff it gives incentive for employers to have more employees around which injects money into federal income tax and even more money back into the economy.

It's hardly a pyramid scheme. It's the basis of economies for centuries.

The scenario you described is legitimate spending within one's means. The problem is that we haven't done that for about two decades now. The savings rate has been negative for almost a decade and we've been leveraging tomorrow to enjoy today.

What the economy is is a giant ponzi scheme. Governments, local, state and federal, have budgeted themselves on the fact that consumer spending will continue to soar non-stop. Companies have banked on this fact as well, expanding well beyond their means in many cases. Consumers have banked on this as well, and with the availability of easy credit and distant payments, continued to buy things at a greater and greater rate. Now that the scheme is up with the current financial crisis, Joe, Dick and Harry are left holding the bag while the real profiteers are enjoying their excesses. The government is trying to keep the ponzi scheme going to prevent a total collapse of the system, but, IMO, it's simply rearranging the deck chairs on the Titanic.

 

[Xavier434]

Think about how far behind we would be compared to the rest of the world if we only spent money on necessities throughout the majority of our lives? The circulation of money through the purchasing of luxuries has lead to massive amounts of progression. Technology is both a general and perfect example.

 

[Vic]

Economy = activity.

 

[BoberFett]

Originally posted by: Vic
Economy = activity.

Debt based trinket purchasing = unsustainable activity = unsustainable economy

This ride won't last forever. The incredible prosperity of the last 30 years in the US was a farce and we're about to see it come crashing down.

 

[Vic]

Originally posted by: BoberFett

Originally posted by: Vic
Economy = activity.

Debt based trinket purchasing = unsustainable activity = unsustainable economy

This ride won't last forever. The incredible prosperity of the last 30 years in the US was a farce and we're about to see it come crashing down.

You sure read a lot more into my post than what I wrote, eh?

 

[0marTheZealot]

Originally posted by: Xavier434
Think about how far behind we would be compared to the rest of the world if we only spent money on necessities throughout the majority of our lives? The circulation of money through the purchasing of luxuries has lead to massive amounts of progression. Technology is both a general and perfect example.

You're missing the point. For one thing, our lead was unsustainable, just like you can push an engine to it's absolute breaking point and jump out to a huge lead in a race, only to pay for it at the end when your engine conks out. Secondly, no one advocated buying the necessities only. That would lead to a bland, uninteresting lifestyle for many people. However, what I am saying, and I think others are, is that the unsustainable spending practices of Americans led us into a bubble in which we thought our lifestyle was sustainable and everyone counted on this.

Collectively, we outspent what we earned and we leveraged everything to keep it running that way. In that sense, as a society, we are like the crack addicts who pimp out their daughter for an extra hit. We got second, third and fourth mortgages, we took out 4, 5, 6 credit cards, we loaned against our 401k and against our expected future earnings. As a society, we were too complacent with our politicians, letting them set unrealistic and unreachable goals, budgets and promises. We let industry go too far, I mean home builders were making hundreds of thousands of homes that could not have been sold; there are literally not enough people who can buy homes in the US to justify the building, but it was profitable for them. The ponzi scheme is up and we are still trying to frame our world in the old terms.

Economic recovery will be painful and will result in a more frugal America. There is no other choice. You can't make 50k/year and spend 65k/year and expect that to continue to infinity.

 

[Xavier434]

Originally posted by: 0marTheZealot

Originally posted by: Xavier434
Think about how far behind we would be compared to the rest of the world if we only spent money on necessities throughout the majority of our lives? The circulation of money through the purchasing of luxuries has lead to massive amounts of progression. Technology is both a general and perfect example.

You're missing the point. For one thing, our lead was unsustainable, just like you can push an engine to it's absolute breaking point and jump out to a huge lead in a race, only to pay for it at the end when your engine conks out. Secondly, no one advocated buying the necessities only. That would lead to a bland, uninteresting lifestyle for many people. However, what I am saying, and I think others are, is that the unsustainable spending practices of Americans led us into a bubble in which we thought our lifestyle was sustainable and everyone counted on this.

Collectively, we outspent what we earned and we leveraged everything to keep it running that way. In that sense, as a society, we are like the crack addicts who pimp out their daughter for an extra hit. We got second, third and fourth mortgages, we took out 4, 5, 6 credit cards, we loaned against our 401k and against our expected future earnings. As a society, we were too complacent with our politicians, letting them set unrealistic and unreachable goals, budgets and promises. We let industry go too far, I mean home builders were making hundreds of thousands of homes that could not have been sold; there are literally not enough people who can buy homes in the US to justify the building, but it was profitable for them. The ponzi scheme is up and we are still trying to frame our world in the old terms.

Economic recovery will be painful and will result in a more frugal America. There is no other choice. You can't make 50k/year and spend 65k/year and expect that to continue to infinity.

You are talking about fiscal responsibility which I agree is important, but the bottom line here is that our problem right now is that people are not buying things. No matter what we do to try and fix our economy, the result needs to be more people buying more crap. Obviously moderation is key as it is with everything but hopping from one extreme to the other only destroys us.

Also, keep in mind that fiscal responsibility problems amongst individuals with extreme cases are not the only problem here which you did touch on especially with the home builder stuff. It was profitable for these guys because big time rich investors saw home building as the next big cash crop. They were so greedy and irresponsible about their investing that they contributed a lot towards wrecking this market and the result is a ton of innocent American suffering greatly for their mistakes. I realize they act as only one slice of this very large pie mind you, but it is a big slice.

Generally speaking, this econ relies heavily on loans and credit but that does not mean we should just give it out to everyone. This is why I support more proper regulation to make sure that such a thing remains in check. It is simply too important now to allow it to run almost completely free.

 

[StageLeft]

Originally posted by: TheRedUnderURBed
Overproduction is a disaster for capitalism, thus the Freudian advertising mind games since the 20th century getting you to believe you need to buy useless shit for your own self-worth instead of the actual need or utility.
Good BBC documentary about this called "The Century of Self".

-----------------------------------------
"This series is about how those in power have used Freud's theories to try and control the dangerous crowd in an age of mass democracy."

Bernays invented the public relations profession in the 1920s and was the first person to take Freud's ideas to manipulate the masses. He showed American corporations how they could make people want things they didn't need by systematically linking mass-produced goods to their unconscious desires.

His most notorious coup was breaking the taboo on women smoking by persuading them that cigarettes were a symbol of independence and freedom. But Bernays was convinced that this was more than just a way of selling consumer goods. It was a new political idea of how to control the masses. By satisfying the inner irrational desires that his uncle had identified, people could be made happy and thus docile.

It was the start of the all-consuming self which has come to dominate today's world.
-----------------------------------------
Great watch that shines the spotlight on the manipulation of the masses that created our shallow consumerist culture and how we pretty much are the corporate elites bitches now from cradle to grave thanks to combing the "art" of psychoanalysis with advertising.
The Century of the Self - Part 1
The Century of the Self - Part 2
The Century of the Self - Part 3
The Century of the Self - Part 4

It is long, but you will never listen to a commercial or look at a billboard the same.
Edit: Link madness

Sounds poignant and since I'm already inclined to this conclusion anyway, that we are taught to be empty consumerist whores, I think I may watch this.

 

[First]

Originally posted by: Vic

Originally posted by: BoberFett

Originally posted by: Vic
Economy = activity.

Debt based trinket purchasing = unsustainable activity = unsustainable economy

This ride won't last forever. The incredible prosperity of the last 30 years in the US was a farce and we're about to see it come crashing down.

You sure read a lot more into my post than what I wrote, eh?

You assume he read your post.

 

[rudder]

Why do we need to spend money?

Within a 20 minute drive in either direction of me I can visit 3 Home Depot Stores, 3 Lowes Stores, 3 Target stores, 2 Super Walmarts, 2 Office Depot Stores, 2 Staples stores, 2 Circuit Citiy stores (although one that just opened in July is closing), etc etc. These places are barely making it. I have to spend spend spend.

And this is not in a large metropolitan area. It is about 20 miles outside of Nashville.

 

[Stunt]

Simple...

GDP = C + I + G + (X - M)
Gross Domestic Product = Consumption + Investment + Government Spending + Exports - Imports

In the US's pursuit of economic growth, money supply was increased through lower interest rates inflating consumption, US officials actively looked to sell American assets to foreign investors, government spending was increased in the form of defense spending, education spending, healthcare spending all to make up for imports from china, india, middle east. GDP is what determines the amount of debt a nation can sustain and is a leading indicator of wealth generation.

Consumption is proportional to wealth...

 

[TehMac]

Originally posted by: PrinceofWands
It isn't really. Materialism, consumerism, and the like are inherently negative for an individual and a nation as a whole.

Despite the fact that every single society has been driven and consequently advanced by consumerism.


GG moron.

Originally posted by: BoberFett
Debt based trinket purchasing = unsustainable activity = unsustainable economy

This ride won't last forever. The incredible prosperity of the last 30 years in the US was a farce and we're about to see it come crashing down.

P.S. Communism absolutely fell on its face and failed about 19 years ago. Get with the times.

 

[0marTheZealot]

Originally posted by: TehMac

Originally posted by: PrinceofWands
It isn't really. Materialism, consumerism, and the like are inherently negative for an individual and a nation as a whole.

Despite the fact that every single society has been driven and consequently advanced by consumerism.


GG moron.

Take it to it's logical end then. Every society has fallen and that fall has been precipitated by a major financial crisis. So why take the first and leave out the second?

Secondly, consumerism isn't the problem, it's reckless consumerism driven by pure greed that is the problem. Like I said, if you make 50K/year and spend 65K/year, it is not sustainable. Every single entity in American has been doing exactly that, from the single family to the Federal Government. Eventually, you have to sleep in the bed you make.

Originally posted by: BoberFett
Debt based trinket purchasing = unsustainable activity = unsustainable economy

This ride won't last forever. The incredible prosperity of the last 30 years in the US was a farce and we're about to see it come crashing down.

P.S. Communism absolutely fell on its face and failed about 19 years ago. Get with the times.

He said nothing about communism. Talk about a strawman argument.