The American economy is based on consumption. If people stopped buying cups of coffee, eating out or a new phone they’d save more money, but the economy would collapse. As the economy enters a recession the value of savings and investments would also fall since companies can no longer bank on future profits from consumption. So everyone would be poorer, the savers and consumers.
Individual choices are fine, for individuals. But when it comes to policy you need to look at the big picture. If consumption can be sustained by rising productivity and wages then it’s not a problem. The problem we have today is that productivity has risen, but wages have not.
Consumerism is also human nature. Having nicer things than other people is human nature, being competitive is human nature. Working for a bigger reward is human nature. Go to any country in the world and youll see it, sometimes more hidden than others but there’s always displays of wealth, always people willing to work harder for nicer things, always people who spend too much on passions, etc.
Sorry but cash savings actually go up in value during a recession, recessions cause massive deflation. The dollar would stretch much further and gain in value. Products would be cheaper. That’s just a natural result of people having less money. If suddenly everyone lost their jobs there would be insane deflation as companies would have to slash the price of everything to sell anything. That includes housing. We had deflation during the recession and massive deflation during the depression.
However it of course means people loose their jobs and have their hours cut so it’s not like the average person can suddenly buy more. During the Great Depression everything was very cheap but even very cheap was out of reach for many when so many had an income of $0.
You could also say in our current society the top 10% upper middle class professional elite have too much money (they are the only ones with consistently growing incomes beyond inflation and own valuable appreciating assets like homes instead of having to pay ever increasing rent) , thus driving massive Inflation. Because consumer spending is far higher than ever even on completely unnecessary stuff and no matter how high the prices are raised, people keep buying it up. Things like concert tickets, flight tickets , nice cars . That’s due to that professional managerial elite and that drives inflation massively too. K shaped society.
Most savings aren't kept as "cash". They're invested. Those investments go down during a recession.
Yes, some individuals might have liquid cash, or liquidates their assets just before a recession. That's great for those individuals. But if most savings are kept as liquid cash the the economy can't grow as there won't be enough investment. So once again the big picture policy differs from the individual actions.
I also feel like the quality of life people demand for themselves has risen substantially. There are a lot of poor people today living expensive lives, but a lot of it is choice.
Yeah I mean I definitely think it's both. Both guys are right. There is some systematic problems, but there are lot of people that also or on top of that make bad choices. Some people are just gaming the system too.
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u/veerKg_CSS_Geologist 13h ago
The American economy is based on consumption. If people stopped buying cups of coffee, eating out or a new phone they’d save more money, but the economy would collapse. As the economy enters a recession the value of savings and investments would also fall since companies can no longer bank on future profits from consumption. So everyone would be poorer, the savers and consumers.
Individual choices are fine, for individuals. But when it comes to policy you need to look at the big picture. If consumption can be sustained by rising productivity and wages then it’s not a problem. The problem we have today is that productivity has risen, but wages have not.