That Which Is Too Fearful To Speak: The Demise of the Consumer Economy
The consumer-debt-based economy is doomed; good riddance. It was nothing more than an elaborate cargo cult based on marketable anxiety.
The consumer-debt-based economy is toast, but everyone's too terrified by its demise to acknowledge this reality, never mind consider a new model. The entire creaking economy is based on a few ideas which no longer work:
1) Create "aggregate demand" (i.e. consumer demand, which then creates business demand) and the economy "grows," people are hired and get paid, and that's good.
2) When consumer demand slumps because people are over-indebted and can't afford to buy more of anything, then "stimulate" demand with massive Central State spending to replace the vanished private demand.
3) Demand is endless. You can never have enough stuff, food, vacations, education, healthcare and toys. Give people free money, or the ability to borrow nearly-free money, and they will spend, spend, spend. This creates "growth" which is always good.
A funny thing happened on the way to the infinite demand/consumption model--or actually, two things:
A. People borrowed all they could afford, and then borrowed more. Now they can't borrow any more, even if the interest rate is low. By some estimates, American consumers need to pay down $4 trillion in debt just to restore the income-to-debt ratios of the early 1980s, never mind the early 1960s.
B. Infinite demand met marginal return in a dark alley, and infinite demand is in the gutter, whoozy and bleeding profusely.
That horrendously costly master's degree has only a marginal return in the real world--or perhaps a negative return.
That expensive McMansion provided no better shelter than a much more modest home, and its investment return is atrociously negative.
That $120,000 5-day stay in the hospital paid by Medicare didn't fix the health problem; it made it worse, because the patient didn't need hospitalization or the procedure, and the previously moderately-ill patient caught a drug-resistant bug in the hospital and is now very ill--and therefore needs more treatment at $120,000 a week (this was the actual bill for my friend's father's 5-day stay in a hospital, a stay he was forced into accepting lest he be a "bad patient." He could have easily been treated in an out-patient clinic.) Nice return on a $120,000 "investment" to meet the "infinite demand" for sickcare.
You see the point: "investing" disposable income in debt service to borrow more money to blow satisfying "infinite demand" has left consumers over-leveraged and insolvent, crushed under impossible-to-pay debt loads, while all that debt-fueled spending has yielded increasingly marginal returns.
The amount of debt that can be leveraged has diminished to near-zero, and so has the return on that spending.
There's another deeply pernicious facet to a consumer-based economy: our identity and meaning now flow from consumption, not from production or inner resources. I spent a considerable amount of Survival+ explaining how marketing and consumption are two side of the same coin.