• 90 days Could Crypto Overtake Traditional Investment?
  • 95 days Americans Still Quitting Jobs At Record Pace
  • 97 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 100 days Is The Dollar Too Strong?
  • 100 days Big Tech Disappoints Investors on Earnings Calls
  • 101 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 103 days China Is Quietly Trying To Distance Itself From Russia
  • 103 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 107 days Crypto Investors Won Big In 2021
  • 107 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 108 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 110 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 111 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 114 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 115 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 115 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 117 days Are NFTs About To Take Over Gaming?
  • 118 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 121 days What’s Causing Inflation In The United States?
  • 122 days Intel Joins Russian Exodus as Chip Shortage Digs In
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Americans Keep Digging

The first rule of holes is that when you find yourself in one, quit digging. Not so for Americans, who simply buy larger imported shovels. Take today's personal spending and income data, which revealed a .3% rise in February personal incomes, the largest increase in four months. Yet did Americans use any of those income gains to pay down even a small portion of the staggering debts they have been accumulating, even as their IOU's continue to lose value on foreign exchange markets with each passing day? Not likely. In fact, they even managed to go further into debt by increasing their spending by .5%. As a result, the personal savings rate slipped again, to a meager .6%.

The conventional "wisdom" praises Americans for their profligacy while condemning foreigners for their thrift (ironic because without foreign savings, Americans could not borrow). As a result, Wall Street and the media predictably received this data as good news. What would have been the reaction had American consumers acted responsibly for a change and had denied themselves some current gratification for the sake of the future? What if they acted like adults, rather than undisciplined children, and paid down debt? What if they had decided to put some money aside for their kids, a financial emergency, or retirement? What if personal spending actually declined?

Such an inevitable first step down the road to financial responsibility would have been greeted by Wall Street and the media as a disaster; evidence that the "heroic" consumer had finally run out of gas. This is because the entire house of cards that is the U.S. economy, and the over valued stock and housing markets it supports, rests on the continuation of reckless borrowing and consumption which must inevitably come to an end. Given the fact that sooner or later the American consumer will "run out of gas," wouldn't it make sense for him to refill his tanks before they run dry? Ironically, the longer consumers borrow and spend, the more severe the long-term damage they inflict on the U.S. economy, and the greater the inevitable declines in the very asset prices their irresponsible behavior temporarily props up.

Back to homepage

Leave a comment

Leave a comment