Repaying debt is not “saving,” and you cannot spend what you don’t have. Two things most of us know but which don’t make it into a lot of economics textbooks. A lot of what makes it into the textbooks, and into MSM commentary on economics, is pure gobbledygook, which Raúl Ilargi Meijer skewers at automaticearth.com:
That title may be a bit much, granted, because never is a very long time. I might instead have said “The American Consumer Won’t Be Back For A Very Long Time”. Still, I simply don’t see any time in the future that would see Americans start spending again at a rate anywhere near what would be required for an economic recovery. Looks pretty infinity and beyond to me.
However, that is by no means a generally accepted point of view in the financial press. There’s reality, and then there’s whatever it is they’re smoking, and never the twain shall meet. Admittedly, my title may be a bit provocative, but in my view not nearly as provocative, if not offensive, as Peter Coy’s at Bloomberg, who named his latest effort “US Consumers Will Open Their Wallets Soon Enough”.
I know, sometimes they make it just too easy to whackamole ‘em down and into the ground. But even then, these issues must be addressed time and again until people begin to understand, and quit making the wrong decisions for the wrong reasons. People have a right to know what’s truly happening to their lives, and their societies. And they’re not nearly getting enough of it through the ‘official’ press. So here goes nothing:
US Consumers Will Open Their Wallets Soon Enough
People are constantly exhorted to save, but as soon as they do, economists pop up to complain they aren’t spending enough to keep the economy growing. A new blogger named Ben Bernanke wrote on April 1 that there’s still a “global savings glut.” Two days later the Bureau of Labor Statistics announced the weakest job growth since 2013, which economists quickly attributed to soft consumer spending.
The first problem with Coy’s thesis is that even if people open their wallets, far too many of them will find there’s nothing there. And Bernanke simply doesn’t understand what savings are. His ideas through the past decade+ about a Chinese savings glut were always way off the mark, and his global – or American – savings glut theory is, if possible, even more wrong. In the minds of the world’s Bernankes, there’s no such thing as people opening their wallets to find them empty. If they don’t spend, they must be saving. That there’s a third option, that of not having any dollars to spend, is for all intents and purposes ignored.
To continue reading: The American Consumer Will Never Be Back
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“Disposable income” evaporated. It is being used to buy the most expensive food I have ever seen. Two years ago,a set of tires on the 3/4 ton Dodge was under $600. Last week ,it was over $900. The gubmint along with lamestream media can say and publish whatever they want. Reality says that we are running on empty.
Yup–Knuck’s comments-above are dead on.
Here where yours truly resides, a pop-up community of newly-minted execs and silicon-valley types, the bottom has dropped out some time ago, even tho the median income is astronomical.
Do this in your community–slowly drive past your neighbor’s pile of rubbish “recyclables” each week; I jog and run daily, so this “rubbish media” literally hits me (and my nose) in the face four times a month.
Back in the “glory days” (pre-2008) you’d see plenty of empty bottles of Dom Perignon galore outside in the greenie-tubs on the tree lawns on rubbish pick up day. Not only good hooch, but they were a valid and confirming sign to all neighbors that “this family has arrived.” Black Jack Pershing said it best: “Perignon, je suis arrive!”
Alas, but now the weekly “roll out” of execs’ detritus from seven-figure salary households here is literally “in the pits.” Cheap empty cans of beer piled high in the recycle-please lawn buckets, like skulls piled high by the marauding Huns who had just besieged, conquered. and massacred an entire European castle’s population.
Pride and cheap beer goeth before (and after) a fall. My local denizens did, in fact, have a champagne income to support their champagne tastes in the past. No more. I shudder to think of the balancing act they are doing with the rest, residue, and remainder of their budgets.
Vast and wild consumer spending/ Nope, it ain’t there and will not becoming back soon. As our dear Lord said on the cross before he expired: “It is finished.” But, at least Jesus redeemed mankind for his suffering and death.
Today, yon consumer could only hope and pray for a death on Bryan’s “Cross of Gold” speech. At least he’d have died for a physical asset. Nope. Today’s consumer has died for green tawdry fiat-paper. Finis.