Are frugal people ruining the economy?

re: Are frugal people ruining the economy?

Gregory — Thu, 05 Feb 2009 19:13:00 GMT

New government debt and other responsibilities created from spring 2001 to spring 2007 - in total, perhaps as much as 20 trillion dollars. Are we really paying as much in interest (in 2009) on the national debt created from spring 2001 to spring 2007 as was the total of the year 2000 federal budget?

re: Are frugal people ruining the economy?

Gregory — Thu, 05 Feb 2009 19:02:13 GMT

It seems we have been in a depressive economic state, nationally and globally, sense early 2001. Regardless of all the increases in Government spending from 2001 to 2007 and regardless of all the new government debt created over that same lenght of time - recession/depression appears to have taken place. Unlike the effect of the multipliers as they may reflect capital expansion and growth; when the multiplier effect is applies to debt/credit ‘growth’, the interest rates attached to those usury multiples extend, almost exponentially, onto all future profits.

We have reached the limits and space of our "Credit Expansion Economy" (Morales 2004). Realizable earned wage incomes for national and global working populations seems to have fallen while the real cost of living has increased. This disparity in affordability has been hidden by the extension of ever-larger amounts of credit debt to these working class (people who work for a living) populations..., the workers can no longer increase the level of debt they carry, nor maintain the interest payments on the debt they have already have gathered. Nevertheless, unlike the capitalist model – in a credit expansion economy constant growth is the single condition of operability; when there is no growth the systems falls in total for there is little if any reserve wealth stored in the hands of the super-majority of our population. We need a new economic model, an Economic Democracy, but it seems the wealthy and powerful of our nation and our globe will not allow such a transition to take place.

re: Are frugal people ruining the economy?

TheTeacher — Tue, 25 Nov 2008 05:43:55 GMT

OMG!!! I think I am seeing savers... Yaaaaakkkk...

Anyone who has saved any money will have to write 100 times: "I will become a nice obedient kiddo, and will borrow and spend, spend, spend".

And tomorrow you have to come with your parents.

Wake up folks: the credit default swaps "toxic" bad paper is $60 Trillion!!!!!

That is more than the GDP of the whole planet. Paulson's $700 billion is a funny little JOKE! That is why he has no clue what to do with it.

Get ready. We will not escape this one. Be prepared for the end of civilization as you know it.

re: Are frugal people ruining the economy?

CB — Fri, 21 Nov 2008 14:53:48 GMT

It's funny and disturbing at the same time. First of all, blaming anybody at this point is pointless. We've all contributed in one way or another. Second, I'm glad I'm not the first but $194,000,000 for 194,000,000 people is $1 each. So that would be doable but again completely pointless.

Third, isn't one of the foundations of capitalism that is has the ability to correct itself. Maybe we should try a simple solution, one even more simple than giving everybody $1,000,000 (and somehow only spending $194,000,000), more simple than handing out money to anyone: just do nothing. The market can and will eventually correct itself. If you look at the DOW or the S&P 500 since, say, 1950 you'll see a reasonable rate of growth. Yes, through the mid-60's through 1980, it was a fairly stagnet growth but it was still growth. Then, in 1985 we started to grow at a faster rate but still a sustainable rate. But when we got to the mid-90's we started booming. Prices started climbing for all consumer goods. So we boomed and busted and then boomed again. Now we're heading back down. Right now based on my unscientific analysis of the the DOW and the S&P 500's track records, if we were to start the growth rate of the mid-80's again we would be right in line with a blip from the mid-90's til now. But the nature of the beast is that we will have to reset. So yes we'll drop more, maybe a lot more, actually probably a lot more. But again one of the main principles in capitalism is that the economy will correct itself. Intervention on the governments part (or anybody's part) is only going to delay the inevitable bottoming out and prevent the return of sustainable growth.

That doesn't mean the government has no role or, for that matter, any sort of socialism is evil. The government can help encourage better environmental policies, encourage more focus on science, math, english (their's a novel idea teaching kids english and making they use it), foreign languages, history, you know all of those subjects that we used to focus on. But once we've encouraged, the government must back off and let economics and supply and demand take over and not create artificial supply or demand. The government needs to tweak and let go, tweak and let go. Not grab hold and strangle.

My last point is the same as the first: stop blaming everybody else. Admit any mistakes you've made, put your life in order, help those around that need (and want) help, encourage your friends, build relationships, and look out for both your interests and others. We can make it though this time of correction, we just need to keep our heads.

re: Are frugal people ruining the economy?

The Shark Investor — Fri, 21 Nov 2008 11:57:30 GMT

Thanks for linking. Yes, the post was intended to be funny :) But also to provoke some questions. The main point is, don't people put too much effort into being frugal instead of producing value?

re: Are frugal people ruining the economy?

Leslie — Fri, 21 Nov 2008 04:22:43 GMT

Since inquiring minds want to know--I work for an advertising agency, filming television commercials in wild and exotic locations...have a PhD in Marketing/Management. No student loan debt either :) Paid cash for all of my education--work a semester--go to school for a semester. When I get tired of travelling (not for awhile) and want to settle down I'll teach at a university.

re: Are frugal people ruining the economy?

Rob — Fri, 21 Nov 2008 04:09:43 GMT

When people buy houses they can't afford and boats ect. And then they get foreclosed on that is what is wrecking the economy.Also throw in George Bush and the Iraq war and you have a real mess.I could name more but this enough.

re: Are frugal people ruining the economy?

DanielA — Fri, 21 Nov 2008 04:01:01 GMT

How can a frugile person ruin the economy??????? Usually the frugale person is the middle class worker who at this point is not sure if he or she will have a job tomorrow.

I think they call that saving for a rainy day and the thunderheads are bursting.

The rich executives that have massive golden parachutes and think nothing of putting people on the streets so thy can continue to steal from the middle class are doing a good job of it.

Government officials, whose pensions are not affected by this one bit, are bought and paid for by big business and are gutless to do anything about this they are contributing to the freefall and loss of pensions and savings I have not seen a frugile government official offer to take a pay cut.

re: Are frugal people ruining the economy?

Randy — Fri, 21 Nov 2008 03:41:03 GMT

Haven't these people been paying attention? It's the people who have borrowed and spent beyond their means that are pushing the banks and our economy over the edge. Of course, banks must share the blame for not requiring the standard 20% down. Ironically, it will be the savers who pay the price for the mess created by these spend thrifts via artificially low interest rates and implicit taxation on savings in the form of inflation.

re: Are frugal people ruining the economy?

Mike B. — Fri, 21 Nov 2008 03:00:03 GMT

The answer is Of COURSE, YES! But when have you ever see someone that didn't try to sit down when the music stops! Only the yellow-bus kids are left standing. Your intellect says everyone has to keep buying like they did yesterday, but at some point you decide to save yourself before the rest of society takes you down with them. Some countires are smart enough to close the markets and stop the feedback loop. But we're good old capitalist and we believe the consumer is always right, even when they are busily fullfilling self prophetic predictions of doom.