[dinopello]

Were you watching George Will this morning ? He was talking about thrift and why we shouldn't be so thrifty right about now.

It seems to me that in addition to the decision to save or spend, the idea of what you do with the spending matters somewhat to somebody.

If I have a million dollars and I am going to spend it. I could buy half a million gallons of jet fuel and fly around the world a few times. Or, I could use it to employ people to plant orchards, build and endow a school teaching traditional skills or something. Does it matter ?

[MonteQuest]

$this->bbcode_second_pass_quote('dinopello', 'W')ere you watching George Will this morning ? He was talking about thrift and why we shouldn't be so thrifty right about now.

[TreeFarmer]

I'll give it a shot. Most of the money in our system is "debt money" meaning it was created by the banking system when people went into debt. More debt means more money and thus "growth" is increased which may in turn create a sprial of even more debt leading to more money leading to more "growth".

Now, when people save they pay off debt. This leads to less money which leads to less "growth".

So, it seems like the economists are now saying people should spend so that we can resume growth and get our economy "growing" again.

The real "paradox", "question" or whatever you want to call it is, can we have infinite growth in debt and not have a collapse? If you want to have the kind of growth we've had since WWII you need to have an ever increasign supply of debt.

A catch to the paradox of saving is that a minority can definitely save and soon own almsot everything thanks to the non-saving of the majority. The majority borrows and spends to grow the economy and pays interest to the minority who does not borrow but rather saves.

It is no wonder 10% of the people own 90% of the wealth.

TF

[MonteQuest]

$this->bbcode_second_pass_quote('dinopello', ' ') If I have a million dollars and I am going to spend it. I could buy half a million gallons of jet fuel and fly around the world a few times. Or, I could use it to employ people to plant orchards, build and endow a school teaching traditional skills or something. Does it matter ?

[RdSnt]

$this->bbcode_second_pass_quote('TreeFarmer', 'I')'ll give it a shot. Most of the money in our system is "debt money" meaning it was created by the banking system when people went into debt. More debt means more money and thus "growth" is increased which may in turn create a sprial of even more debt leading to more money leading to more "growth".
TF

[RedStateGreen]

As long as our financial system is debt-based, we will be encouraged to spend and be in debt. Thus the huge advertising push starting in the Fifties.

[BlueGhostNo2]

$this->bbcode_second_pass_quote('MonteQuest', 'H')owever, when it comes to conservation, spending the energy on railroads rather than cars, just shifts the end use, and doesn't reduce the overall consumption.

[mattduke]

$this->bbcode_second_pass_quote('MonteQuest', 'T')he plane crash in the Huson was good for GDP.

[Quinny]

Does it matter?

Well of course it does, not to GDP though, which is why GDP is such a stupid measure of success! IMO value judgements have to be made on what we direct human effort to achieving. To the economic/market system it's not really important, but in a world of limited resources it's of paramount importance. Keynes' idea that it's better to have people digging holes and others following behind filling them in might be OK in a boundless world, but we all know there isn't such a place.

We need a central strategy to be agreed by all and a moral agenda to guide communities on the way forward. One of the first things we need to do, is recognise that we are stewards of the planet and not it's masters. If you are a member here on PO surely this should be agreeable whether you are of the right or the left.

$this->bbcode_second_pass_quote('dinopello', 'W')ere you watching George Will this morning ? He was talking about thrift and why we shouldn't be so thrifty right about now.

It seems to me that in addition to the decision to save or spend, the idea of what you do with the spending matters somewhat to somebody.

If I have a million dollars and I am going to spend it. I could buy half a million gallons of jet fuel and fly around the world a few times. Or, I could use it to employ people to plant orchards, build and endow a school teaching traditional skills or something. Does it matter ?

[bratticus]

*pop*

[Heineken]

I don't care about "the" economy, any more than it cares about me.

I care about "my" economy.

I discovered thrift in the early 1990s, and it's why I no longer have to work.

[dinopello]

$this->bbcode_second_pass_quote('MonteQuest', ' ')The plane crash in the Huson was good for GDP.

[MonteQuest]

$this->bbcode_second_pass_quote('BlueGhostNo2', ' ')Just to clarify Monte, when you say this 'just shifts the end use' that 'shifting' is more people able to afford more transportation of goods and people. Right?

If so, I don't think you should say 'just' making good decisions which give us more useful work from the resources we're going to use is in no way 'just' anything.

[MonteQuest]

$this->bbcode_second_pass_quote('mattduke', '')$this->bbcode_second_pass_quote('MonteQuest', 'T')he plane crash in the Huson was good for GDP.

[MonteQuest]

$this->bbcode_second_pass_quote('dinopello', '')$this->bbcode_second_pass_quote('MonteQuest', ' ')The plane crash in the Huson was good for GDP.

[dinopello]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('dinopello', '')$this->bbcode_second_pass_quote('MonteQuest', ' ')The plane crash in the Huson was good for GDP.

[BlueGhostNo2]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('BlueGhostNo2', ' ')Just to clarify Monte, when you say this 'just shifts the end use' that 'shifting' is more people able to afford more transportation of goods and people. Right?

If so, I don't think you should say 'just' making good decisions which give us more useful work from the resources we're going to use is in no way 'just' anything.

[MonteQuest]

$this->bbcode_second_pass_quote('BlueGhostNo2', ' ')This isn't good for reducing consumption but it sure is good for people. I mean our fear is that we'll have starving and rioting right, thats alot less likely if we make decisions which improve efficiency.

[FloridaGirl]

The Paradox of Thrift only exists because our debt based economy requires growth. Since the economy cannot grow infinitely in a finite world, it is doomed to fail. It's a giant Ponzi scheme. I believe we're at that point of failure now. At the point of failure, it doesn't matter (to the macro economy) whether people spend or save, thus the paradox.

An economy is fundamentally a function of resources. Look at Zimbabwe where there is plenty of growth in spending there. The head of the central bank in Zimbabwe thinks the problem is a shortage of money so he keeps printing more and more, but the real issue is they don't have enough resources for their people. So the people keep paying more and more in competition for the limited resources.

What we need after the collapse is a reboot to system that does not require infinite growth. I expect though, they'll try to restart it with another debt-based system.

[lawnchair]

The more insidious problem is the paradox of efficiency. We got to a society with millions of ad execs and botox injectors. This is because we didn't need millions of farm laborers anymore. The world does *not* always need ditchdiggers. It needs backhoe operators. And backhoe manufacturers. And oil refineries for the backhoe fuel. But, overall, more efficient and fewer people than having a bunch of ditchdiggers (or we'd just hire the ditchdiggers).

When, thanks to tech and automation, the West didn't need everyone working 40+ hours a week to meet basic needs, we had two options. Encourage people to work less than 40. Or, encourage them to consume beyond need.

The problem with that is, when Keynes' paradox of thrift kicks in, the only real bottom point is where we've cut back to basic rice-and-beans needs. That point was at about 25% unemployment in the first great depression. It's likely well over 50% now.