Is it a catch 22, do We spend or do We save? (loans, credit card)

[chet everett]

What is that Sgt. Hulka said? Lighten up, Francis.

There is nothing magic about an agrarian economy, or a high value-added manufacturing economy, or a mercantilist economy or any other economy. Look at the problems that have plagued EACH of those economies at various times in various places.

If people use some sense and have some trust in the economy that they are part of, the standard of living for themselves and their neighbors can rise. If there is only nonsense and no trust there is foundering or worse.

[HappyTexan]

Couldn't give you reps hindsight2020 but excellent post.

Red pill vs blue pill.

[sterlinggirl]

Originally Posted by taurus430

It seems like a catch 22. If we spend, it's good for the economy but could be bad for us.
If we save, it's bad for the economy, and might be good for us.

Everybody is hoarding dollars right now, and if/when that bubble pops, things could get a lot more expensive.

Instead of keeping everything in cash equivalents, I've been diversifying some of my extra money into things like preventative maintenance, food storage, replacing some of my ratty old clothes, and other things to help me be as independent as possible over the next few years.

Wealth isn't just having the power to purchase. It can also be independence from the need to purchase.

[RangerDuke08]

Originally Posted by taurus430

It seems like a catch 22. If we spend, it's good for the economy but could be bad for us.
If we save, it's bad for the economy, and might be good for us.

Great question Taurus. Think of two things though, one why are we in this jam? There's a reason to everything. Number two, for every problem there is an opportunity, maybe you shouldn't be thinking of spending or saving, but rather investing, which is good for you and the economy. What you choose to invest in is up to you and how you answer the prior question. Good luck.

[Winkelman]

Originally Posted by taurus430

It seems like a catch 22. If we spend, it's good for the economy but could be bad for us.
If we save, it's bad for the economy, and might be good for us.

You spend, I save.

Works for me.

[Nepenthe]

Originally Posted by taurus430

It seems like a catch 22. If we spend, it's good for the economy but could be bad for us.
If we save, it's bad for the economy, and might be good for us.

It is. It's part of how the market works. For better or worse. Each PIECE is a self-interested piece using economizing behavior. Each piece is seeing greater marginal utility in saving than in spending right now. Some pieces will spend money, seeing lower prices due to demand and quantity demanded falling. But on average, there's more saving, because that's what's perceived as being best by each individual, even though in total, as a whole, it may prolong a recession and cause more bankruptcies and reductions in force.

It's like the stock market. If we buy, it's good for the market, but could be bad for us as individuals. If we sell, it's bad for the market, but could be good for us as individuals. Unfortunately, there are so many individuals acting in self-interest that one guy's attempt to prop up the market by spending is probably just going to hurt him (this is the basis of countless played out lame jokes at my workplace (a brokerage firm) -- "the market is up, did you buy a bunch of stocks today Kevin?" -- "the market is down, did you sell your stocks again Kevin?").

It's an Invisible Hand controlled by millions of self-interested pieces unable to act in the best interests of the whole for fear of being crushed by the actions of all the other self-interested pieces moving the whole in the opposite direction...

Originally Posted by Winkelman

You spend, I save.

EXACTLY.

[Woof]

Originally Posted by taurus430

It seems like a catch 22. If we spend, it's good for the economy but could be bad for us.
If we save, it's bad for the economy, and might be good for us.

I can't imagine how you got the notion that your spending is going to make the slightest difference to the economy - not unless you're Bill Gates or Warren Buffet.

We're headed for some very rough waters, now is not the time to think emotionally about how you can save America. There's a good chance you're going to lose your job, there's a good chance that something catastrophic will happen to the dollar ..... whatever you decide, don't put all your eggs in one basket, because we don't know in which direction everything will come crashing down.

Have some savings, some non-perishable foods, learn a trade that can't be outsourced, invest in a business that will thrive during bad times, whatever.

[HappyTexan]

The shadow banking system is deleveraging. That's trillions of lost dollars. Foreign wealth funds are cashing in and taking their money back home. There's more selling going on then buying by the big boyz and there's nothing we (main street) can do to stop it.

Woof..I don't think even Warren Buffet or Bill Gates together could spend enough to make a dent.
The government had not revealed the total debt of the "toxic" debt being sold off by the banking system. We don't know if they're 25%, 75% or 95% deleveraged. We don't know if it's just beginning or ending.

[Huckleberry3911948]

now is a great time to be without debt.

[Woof]

And that's just the one hurricane spinning off tornados and coming directly at us, HappyTexans, but there are more storms coming from entirely different directions.