The Key To Fixing All of Economic Problems and Inequalities Is Moving Away from Consumerism

[Yavin4]

as the basis for our economy.

More so than taxes, more so than wealth re-distribution, the real culprit behind our malaise is rampant consumerism. Tilting our economy towards consumption leads to the following problems:

1. Forces businesses to outsource over seas in order to make the prices of goods and services more "affordable". Sure, companies could produce goods domestically, but they would take a major hit on their profit margins, and stockholders would just replace management with those that will outsource over seas.

2. Without incomes from actually producing goods, the population turns to using credit in order to feed consumption. Whenever you use credit, you pay the banks an interest rate. These interest rate payments on credit cards, car loans, mortgages, etc. represent a direct wealth transfer from the population to the banking sector.

3. At various intervals, the consumer taps out on its ability acquire credit, and thus, ceases to spend, which in turn leads to economic recessions.

4. By making access to credit so cheap, savers are denied decent interest rates. What moves people from poverty to the middle class is having tangible assets, and the most common is a savings account. The more one saves over time, the less likely they will be poor.

5. Over-consumption is cripples our environment. Most of what we consume winds up in landfills and is sometimes lost at sea during transport.

Until we re-balance our economy between production and consumption, the bad economic times are here to stay.

[upaloopa]

1. A couple of questions I have.

1. If so much is outsourced, who buys the goods and services? There has to be consumers here or there would not be the need to outsource anything. It makes no sense to produce if there are no consumers no matter where you produce.

2. Without income you can't get credit. You have to prove the ability to repay borrowing. Interest is the cost of borrowing money. No one would lend if there wasn't a return on the lending. It isn't transfer of anything. Just the cost of using other people's money.

3. A consumer with no credit has to pay cash. If the consumer has no cash no one would give them credit. Even the payday lenders want proof you can pay back plus interest.

4. Savers are paid what the money they are saving is worth to those who lend it out. Credit costs are a factor of your ability to repay which includes your credit history. Cheap credit only goes to those who usually don't need it in the first place which are usually savers. People with money borrow when the dollars the pay back are worth less that those the borrowed. That is in times of inflation. Also the cause of inflation is too many dollars chasing to few goods. That is what reduces the interest paid on savings. Or another way of saying it is that the demand for money determines the interest paid on the use of the money. Interest rates are low today because the economy is flush with cash, it's just not in the hands of consumers.


5. It's practically impossible to over consume. Just like today, there is not much production because there is not much consumption. There is an equilibrium created. Land fills are full because of the stuff we make things out of. Plastic would fill a land fill, hemp would not.


I suggest taking some economic courses.

[Yavin4]

2. Answers

1. If so much is outsourced, who buys the goods and services? There has to be consumers here or there would not be the need to outsource anything. It makes no sense to produce if there are no consumers no matter where you produce.

This is where extending credit with zero percent interest rates comes in. See housing bubble.

2. Without income you can't get credit. You have to prove the ability to repay borrowing. Interest is the cost of borrowing money. No one would lend if there wasn't a return on the lending. It isn't transfer of anything. Just the cost of using other people's money.

In the last decade, banks and Wall Street did lend to people without income. Today, these same people cannot get credit, and so, they don't consume. Hence, the current economic malaise.

3. A consumer with no credit has to pay cash. If the consumer has no cash no one would give them credit. Even the payday lenders want proof you can pay back plus interest

Again, this is why our economy is dead. No one is buying. An economy built on consumption goes through these boom and bust cycles. We're in a prolonged bust cycle.

4. Savers are paid what the money they are saving is worth to those who lend it out.

The Fed sets this rate, and savers are getting creamed. In the last decade, "cheap credit" went to anyone with a pulse.

5. It's practically impossible to over consume. Just like today, there is not much production because there is not much consumption. There is an equilibrium created. Land fills are full because of the stuff we make things out of. Plastic would fill a land fill, hemp would not.

It is more than possible to "over consume". See the last decade.

I suggest taking some economic courses.

I suggest that you pay better attention to what has happened and what is happening around you.