Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
And yet consumption still makes up how much of GDP? It doesn't matter that a lot of that stuff isn't made here
On a ballpark basis, personal consumption expenditures (PCE) are going to make up a little less than 70% of GDP. But that's from GDP by disposition, and all that it indicates is what a good deal US consumers are getting. In China, PCE is still less than 50% of GDP, and they are none too happy about it. Meanwhile, the only other available categories are gross private domestic investment, government consumption and investment, and net exports. That's it. If you were thinking about things like production, all of those items are over on the other side of the accounts -- as parts of National INCOME, which is something like GDP by source.
Last edited by The_Bishop; 08-20-2014 at 11:17 AM..
Depends on how the consumption is shifted. It only avoids causing economic contraction if the consumption is shifted from people currently in their younger years to people currently in their older years, not from people in their youth to the same people in their old age.
In other words, SS and Medicare taxes are better for the economy than saving.
There would be a lag, yes, if everyone magically changed their ways tomorrow. But Im taking about a changing in thinking amongst Americans, which obviously wouldn't just take effect tomorrow as if it were a government policy going into effect. If anything if there was a sudden decrease in the spending it would be a punishment for living such consumerist lifestyles in the first place at the expense of our futures.....
Clearly you are explaining the effects well of decreased spending and its effects on the economy. But you appear to be disagreeing that it would be more beneficial for the average American to own a larger piece of the economy, than having them own almost none of it but have excellent WallStreet performance...which barely benefits people today other than providing them with one of the ever decreasing supply of jobs..
No. I said earlier that all else equal, a given individual is better off if he/she invests than if he/she spends every dime of income.
I don't think anyone here is trying to argue against that.
As a friend of mine would argue, "If everyone started saving, the economy would contract severely due to a lack of consumer demand". Not saying it's a good argument, but you should prepare a rebuttal to it.
What if everyone used their newly expanded savings as collateral to obtain more credit and spent from that instead?
And by the way, using debt to leverage equity invested in a good idea is an excellent way to build wealth.
Then their net savings are the equity in the assets, or simply savings - debt.
Not the right answer. The original point -- albeit from back on page-1 -- was that if people save, consumption will fall and the economy will therefore contract. Omitted from that analysis is the fact that people -- sometimes the same people -- borrow what has been saved and then spend it on something.
Not the right answer. The original point -- albeit from back on page-1 -- was that if people save, consumption will fall and the economy will therefore contract. Omitted from that analysis is the fact that people -- sometimes the same people -- borrow what has been saved and then spend it on something.
The amount of financial intelligence that would lead to a 20 year old investing and growing would also correlate with "don't get buried in debt."
The amount of financial intelligence that would lead to a 20 year old investing and growing would also correlate with "don't get buried in debt."
Depends on the spread, but the larger point is that debt-phobia is no more sensible than any other phobia. Debt is like a chainsaw. They are both tools. Used properly, they can be very valuable tools. Used improperly, they can cause quite a lot of damage.
What the OP is posturing as a "wealth" building idea is really a re-hash of the 60's realization by so many that working your life away may not be the best way to spend your time and effort. The 60's "alternative societies" created many ways to get around the cost of living that required a blistering pace of life they witnessed their parents indulging in, consisting of work and home responsibilities that left little time for anything else. Questioning the American way of life, AKA having it all, isn't new.
But the attraction of a materialistic life wasn't without it's rewards, even though many understood the trade off and it's time consuming consequences, haircuts and BMW's crept into their lives along with a ton of other stuff that signaled the arrival of a "new" consumption age of the so called "young urban professionals" aka, the Yuppies. Now the entire notion of work and it's "rewards" is again being scrutinized, but in a different way. These days having "fun" is the order of the day, and part of that is owning "stuff" and having grand "vacations" in exotic countries ziplining our way to nirvana while sipping cocktails served by poverty stricken waiters. It isn't surprising that these "rewards" are being looked at with a big question mark hanging over them.
The current state of affairs in America is simply the result of man's being hardwired to look out for his own self interest. This accounts for most of the corporate greed that has turned this nation into a type of hi-tech plantation of Dilbert like cubicles of disenchanted workers. It also accounts for our poverty stricken ghettos and the self serving mindset that allows them to exist. The fundamentals of power rely on a kind of self serving mentality being the norm, an example would be the fact that most of America has readily accepted a horrible imbalance of power in a supposedly democratic nation as the norm, as long as you have your "stuff" everything else is secondary.
Thinking that there really IS a strategy that is up to the task of dismantling this juggernaut of self interest shows a lack of fundamental understanding with regard to human social realities, and worse is the revelation that some are seeing the circus of modern living as something acceptable with the exception of it's lopsided distribution of well being. We didn't come this far into our current living paradigm without accepting it's pitfalls, simply put, we've come a long way down a dubious path (overpopulation, consumerist ideals, and "me-ism) and the way back won't be an easy one, if it exists at all.
Depends on the spread, but the larger point is that debt-phobia is no more sensible than any other phobia. Debt is like a chainsaw. They are both tools. Used properly, they can be very valuable tools. Used improperly, they can cause quite a lot of damage.
Debt is only a good idea from the individual perspective if the optimal fixed-income allocation of a portfolio is less than zero, or if the investment involves purchasing large, indivisible, asset(s) that one doesn't have the cash for.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.