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Fed: consumers cut debt by record $21.6B in July - Yahoo! News (http://m.www.yahoo.com/_ylt=Aj.pesZMvEZj4gtmqfnP34SbvZx4/SIG=12hco3q5j/**http%3A//news.yahoo.com/s/ap/20090908/ap_on_bi_go_ec_fi/us_fed_consumer_credit - broken link)
It looks as if the consumer is not as enthusiastic about the economy as the media. With 70% of the economy coming from consumer spending, it is hard to see how things can be as upbeat as picture being painted by all the "positive reports".
Fed: consumers cut debt by record $21.6B in July - Yahoo! News (http://m.www.yahoo.com/_ylt=Aj.pesZMvEZj4gtmqfnP34SbvZx4/SIG=12hco3q5j/**http%3A//news.yahoo.com/s/ap/20090908/ap_on_bi_go_ec_fi/us_fed_consumer_credit - broken link)
It looks as if the consumer is not as enthusiastic about the economy as the media. With 70% of the economy coming from consumer spending, it is hard to see how things can be as upbeat as picture being painted by all the "positive reports".
As consumers cut debt and fix their balance sheets they will start to have more money to spend. Many people have already done this, and many more will do so over the next few years.
In terms of the recession what is important is that the spending stabilizes and it is doing just that. A modest percentage of spending during this decade was debt driven so consumer spending had to contract once the debt was cut off. But this has already occurred and now people are improving their financial health which is good for the economy...funny you see it the other way.
As consumers cut debt and fix their balance sheets they will start to have more money to spend. Many people have already done this, and many more will do so over the next few years.
In terms of the recession what is important is that the spending stabilizes and it is doing just that. A modest percentage of spending during this decade was debt driven so consumer spending had to contract once the debt was cut off. But this has already occurred and now people are improving their financial health which is good for the economy...funny you see it the other way.
If you read the article the writer see's it the same way I do. If people are charging less, then they are buying less.
If you read the article the writer see's it the same way I do. If people are charging less, then they are buying less.
I don't care whether the author sees things like you do, its short sighted regardless.
The article is not about people "charging less", its about consumer debt. When a household starts to pay down debt it will hit their purchasing power at first, but more long term it will increase it. Many have already done this and are in better positions (to spend) than they were 2-3 years ago and many are in the process. Of course, many people are not doing this willing rather because lenders have cut them off. But the effect on the economy is the same.
Sounds like people are finally buying what they can afford, novel concept. Buying is down because people are no longer over consuming in excess of their income, now that the cost of debt has increased so much, but not necessarily turning into misers.
Oh yes, the mythic inflation! Inflation is no where to be seen and people paying down debt is deflationary not inflationary.
Inflation is everywhere, the cost of raw materials, food and fuel are going up. Anyone who cannot see the growth in the money supply is fooling themselves. Even the CPI is up this year. While personal debt may go down, government debt is increasing exponentially. Deflation is only short-term while inflation is long term. Tiny deflationary periods vanish under a mountain of inflation that we have seen since 1913.
Inflation is everywhere, the cost of raw materials, food and fuel are going up.
Inflation is nowhere. In terms of prices, almost everything is doing down in price right now.
Quote:
Originally Posted by tallrick
Anyone who cannot see the growth in the money supply is fooling themselves.
The FED can grow the money supply all it wants, but the money actually has to be used to cause inflation. People paying off debt and using less credit shows that the money is not being used.
People have been crying about inflation for a good 3~4 years now, and still no inflation to be seen. I guess the "short-term" is now the long term.
Inflation is nowhere. In terms of prices, almost everything is doing down in price right now.
Except gold, copper, food, oil, healthcare, insurance, and all those other things we "need" to live.
Quote:
Originally Posted by user_id
Oh yes, the mythic inflation! Inflation is no where to be seen and people paying down debt is deflationary not inflationary.
Quote:
Originally Posted by user_id
The article is not about people "charging less", its about consumer debt. When a household starts to pay down debt it will hit their purchasing power at first, but more long term it will increase it.
You're contradicting yourself again User. As debt reduction destroys our currency prices should drop to allow us to maintain purchasing power, that isn't happening because of government interference in the markets. Perhaps you can explain how you expect us to have more purchasing power with fewer dollars available to the public while prices for things like houses, healthcare, education, food, energy and cars are propped up by the government instead of being allowed to find a natural bottom.
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