So this idea has been kicking around in my head for a few days now.  The news and even popular culture has been filled for the last few months with messages about how the evils and excesses of consumerism have lead to the current market crash.  While to a degree this is true, there is a huge flaw with this argument.  Namely that to dig ourselves out of this mess, we have to spend money.  The true fault lies not with wanting stuff, and gadgets, and luxuries, but rather with the acceptance of debt as the way to pay for these things.  Spending money didn’t get us in this mess, spending money we didn’t have did.  Some naysayers have gone so far as to announce the beginning of the end of America as a superpower.  Saying this crisis is the event which marks the changing of the guard from western dominance of global politics and economics to China and the developing world.  I just don’t see it, not anytime soon at least.

I’ve heard several “market strategist” types who work in investment or oil firms refer to “oil time.”  When oil companies plan for the short term, they mean decades.  They consider the next 20 years short term because of how long it takes from finding a new source to actually delivering refined product to the market.  That is what China’s road to the top looks like in my opinion.  Undeniably they are a country on the rise.  With a labor force dwarfing that of America and the worlds largest market in their backyard, they have numerous advantages over the West in the long run.  But they are also still hampered by a Communist regime that will never completely open up and hundreds of millions of rural poor living in abject poverty.  If we think we have a health care problem in America, imagine tripling the number of people needing coverage and then having doctors only in New York and Los Angeles!

Anyway, my point in a round about way is this.  Save. . . so you can spend.  There are still dark days ahead, most projections don’t see us hitting bottom and starting to come back out until sometime during 2009 or beyond.  But the way out is to stay positive and spend money wisely.  Don’t blow it out on things you don’t need and can’t afford, but don’t stop spending all together.

p.s. parents – this post is speaking on issues of macro-economics, not personal finance.

Filed under: life by Jonathan