Gone4Good
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Sep 9, 2005
- Messages
- 5,381
I added the numbers ...
1) IF we've been spending at a breakneck speed, a sudden change leads to lots of dislocations which have real cost. That doesn't mean our economy couldn't be sustainable with lower levels of consumer debt.
2) Debt was part of the fabric of our system long before the Fed. Debt is a good thing when it's the other side of a voluntary transaction that involves somebody deferring consumption.
3) Our economy couldn't last without savings, and I wouldn't know where to find an economist who would disagree with that.
4) Correct. Adam Smith explained how an economy can work efficiently even if it's a totally impersonal set of rules. It's not a moral system, but it's not immoral either.
5) You work, earn, then choose to spend or save. Some private businesses are planning to make a profit on your spending, some are trying to make a profit on your saving, many are interested in both your spending and saving.
+1
I'll expand on #4 to say it is not a moral or immoral system, it is an amoral system. It is not designed to reward virtue and punish vice, it's designed to allocate resources and couldn't care less about any puritanical notions of right and wrong. Nor should it.
I think I'm saying there is nothing inherent in free market capitalism (or fiat money, if that's your underlying concern) which forces us to over-spend and under-save. If Americans do that, IMO it shows that we aren't using this tool as well as we should.
It seems pretty clear, though, that the mercantilist policies of our trading partners (managed exchange rates, centrally planned export policies, etc) and the largely laissiez-faire policies of the U.S. have lead to a situation where we borrow a large chunk of the world's savings and they borrow a large chunk of our consumption. This isn't a product of free market comparative advantage, but rather of manipulated markets on one side and relatively open markets on the other.