Consumer spending is 70% of our GDP.

George W. Bush sat up there and told Americans it was our patriotic duty to shop after 9/11.

Over the past several years, wages have stagnated and expenses have gone up steadily.

Banks engaged in the most egregious sort of deceptive advertising and sales tactics to get people into bad mortgages.

Credit card companies have been engaging in similar deceptive sales practices, charging usurious rates, and arbitrarily changing their interest terms and billing cycles to trap people in a cycle of debt.

Daily we are reminded about how many stores are closing due to crashing consumer confidence and the layoffs that ensue from that.


But Aly What-His-Face on CNN just told me that "people didn't have guns to their heads to get into those mortgages" and that "consumers are spending too much money to be able to save and invest". Gee, Aly, ya think?

This post is sort of stream-of-consciousness but what I want to know is am I the only one who thinks there's a bit of a paradox at work here? Seems like we're damned if we spend and damned if we don't. Sure, if consumers spend less they have more money to save. But at the same time if they don't spend in a consumer spending-based economy, then a lot of businesses go under and people lose their jobs. Let's not forget that wages have NOT been keeping up with inflation.

And please, if you are one of those people who is super-good with money and financially savvy, congratulations to you, but that's not what this OP is about so try not to regale me with tales of your amazing ability to budget and save and invest.

C = Consumer Spending = 70%

I = Investment = 15%

G = Government Spending = 10%

X-M = Exports - Imports = 5%

And floats to the top.

I've seen people claim that Jimmy Carter went on TV and begged people to rip up their credit cards. Reagan, not so much.

One of the great causes is accounting changes, both in business and at home, people counted *theoretical* income as money in the bank. Bad idea.