Consumer economies fail, if consumers cannot afford to buy..It's just that simple

[SoCalDem]

It's common knowledge that consumer debt is at an all-time high, and that we have (and the rest of the world has) cut back in our spending.

Bailing out GM, Chrysler & Ford may be necessary, but it's like giving a piece of iceberg lettuce to a person dying of malnutrition.

"Consumers" get their "spending money" in very few ways..

1..earn it at a job
2..inherit it
3..steal it
4..borrow it

I know some will say, that many people live on interest from investments, but right about now, that's becoming less and less likely to continue, and really..how many people in your immediate circle are independently wealthy from "investments" that THEY made?..(cannot count "family money")

#2 accounts for the very tippy-top of our consumer base, and those folks do spend a LOT of money, but even they can only buy so much

#3 "works" for a little while, but eventually most of them end up getting caught, and their "consuming" days come to an abrupt end

#4 has become the modus operandi for many, if not most of us, for a long time, and has toxic "end-game" consequences for millions of "former consumers".


#1 is the only sustainable method for keeping an economy healthy, but if "things" cost more and more, and employers want to pay workers less and less, there is a "crash-point"..

If the numbers I have read are true, there is at least a $2 trillion debt in consumer spending. This is money owed to "someone", for "something".

Instead of giving cash to the people who are OWED, wouldn't a more sustainable "fix" be to "give" the money to the people who OWE, with the caveat, that it is for debt reduction to the entities that are owed.

The money ends up in the same place, but it has an added benefit, of paying OFF the debts at the same time.

This does NOT apply to obvious circumstances, such as land speculators, gamblers, etc...but to the rank and file 'consumers" who have been spinning those plates for decades, just trying to keep them from all crashing..trying to keep kids in school keep a roof over their heads, trying to buy food, keeping autos running..you know...USING all those "services" that make up our "service economy".

As all "good" bailouts go, this would have to have limitations and regulations , and would be a ONE TIME "pass go, and collect" initiative.

Part of the "deal" would be for ALL credit accounts to be closed for an interim period, while there is a true sorting out of which consumers would regain credit, and which would not.

Believe it or not, there WAS a time when banks did quite well without every customer having a wallet full of credit cards.

If a family had been paying several hundreds of dollars every month to credit card companies, that money would now be freed up to actually BUY stuff they needed. .. available to replace aging cars, repair "sick" cars, to pay college tuition, to maybe even take a vacation,and spur on economies of vacation-spots.

To get our economy moving, money has to be in the hands of the people who buy "the stuff".


There also needs to be a floor and a ceiling for mortgage debt and for credit cards, for the ones who actually qualify for credit..and for credit cards, there needs to be realistic LIMITS to credit offered and approved. It's lunacy to give an unemployed 18 yr old college student a credit card with thousands of dollars of "available credit"..and to give them multiple "brands" of credit cards.

[gratuitous]

1. When you destroy your middle class

There's no engine, nothing in the tank, to get things moving again. We fought two elective wars of empire while Chimpy cut taxes for his pals. No money, no ability to sustain the military aggression. So the country borrowed. And borrowed. And borrowed some more. Now the folks who run things are finding out that grabbing everything for themselves wasn't such a hot idea. Did you know that some of these overrich fatcat bastards are unpatriotic thieves, as well? And squeezing working folks for everything they can get out of them, even as more people work longer hours at greater productivity, the wealth created was taken away without a trace. Now, when consumer buying power could help ameliorate things, the oligarchs find out that they squeezed us dry. There's nothing left in the tank, and there are two gaping holes marked Iraq and Afghanistan waiting to drain away everything else.

And now these same folks want a trillion dollars from us without oversight, conditions, or follow-up.

[The2ndWheel]

2. Consumer economies fail...on a finite planet

The reason they give unemployed 18 year old college student a credit card with thousands of dollars of available credit is because if they don't, then the economy can't grow. Once everyone who is able to handle a credit card has one, where does the growth for business come from? If everyone saves and only buys when they're able to, where do the jobs come from?

[SoCalDem]

5. When all we manufature, is debt...we all lose..

The jobs come the way they always did before..Ssutainable growth..

Not having 2 Lowes, 2 Home Depots in every community..
A Linens & Things, next door to bed Bath & Beyond, next to Circuit City, next to Best Buy, across from Target, next door to walmart...10 blocks from the OTHER Target/Walmart/Staples/OfficeMax/OfficeDepot/Lowes/HomeDepot, etc etc..

all of them having the identical merchandise, for about the same prices.

Cannibalistic mercantilism does not work, longterm..

[margotb822]

3. I read a great diary on dkos

and I haven't been able to find it again, but basically, it said that the strength of an economy comes from the rate at which money changes hands. It's like a pulmonary system and the stronger the pump (ie the more money changes hands), the faster the flow of money and the greater rate of turnover. It was a great analogy and I'm not doing it justice.

My personal belief is that any business person who believes that the way to grow a business is through tax cuts deserves to fail. The only real way to grow a business is to sell more product. And one can only sell more if people can buy more.

[SoCalDem]

4. Small towns in the sixties had it right

Money circulated and rarely ever left the town. Businesses were locally owned and people who worked there, LIVED there..

Somewhere along the line we left micro in the dust, and opted for macro...with disastrous results:(

[ayeshahaqqiqa]

6. Even though I don't owe anyone any money

I'd agree to this type of bailout. Personally, the only plastic I have is a debit card. I would hope those would still be viable in the world you envision, as otherwise it would be difficult to get things online.

[SoCalDem]

7. Yes.. Debit cards are "golden"

They are secured by YOUR own money:)..but they do provide a record of your expenses...and some do have "credit" attached to them..but it's very limited, and not offered to just anyone.

[Javaman]

8. to paraphrase ray-gun...

the rising tide drowns all not in boats.