Monday, February 2, 2009
Meet Me at the Corner of Save and Don't Save
Ever notice how, if you listen to the “experts”, the public can't do anything right? For years now, our economic wise men have been bemoaning the “negative savings rate” of Americans. But now, in the wake of the economic crisis, people have started saving again, and, guess what, that's BAD! You see, all of a sudden it's important for everyone to spend everything they earn... maybe not pile up credit-card and mortgage debt like before, but certainly not to save anything, because that's bad for business. This is known, to economists, as the “paradox of thrift”. But I have a better term – it's the non-paradox of fiscal insanity on the part of the government, and predatory business practices on the part of banks, credit card companies, mortgage companies, and so on. It's not the fault of the average citizen at all, but of the system he finds himself caught up in. And here's a bit of delicious irony. To the question, “Where's the (saved) money going? To savings accounts? To debt reduction?” the answer is that it doesn't matter, it's bad news either way. So individuals' debt reduction is bad for the economy, eh? Well, I believe them – but that's only because the economy has become so distorted as to favor crushing debt and disfavor living within one's means. This is the economy that is melting down at this point – and, to that extent, I say good riddance.