Saturday, September 25, 2010

Posing as Common Sense

Paul Krugman stands as absolutely Right in this Post, but I, of course, would add a few Words. The first Concept I would express is that Americans have been living above their Means; and by this, I do not mean the acquisition of debt. They purchase $400k Homes, when they should be purchasing $200k Homes. They are buying two $40k cars, when they should be purchasing one $20k car. They are purchasing 10 pairs of $100 Jeans, when they need 5 pairs of $30 Jeans. They buy a dozen $80 Shirts, when they need 7 $20 Shirts. They stay in $200 a Night hotel accommodations, when they could quite acceptably stay in a $60 a Night room. Their Credit slips reflect this lifestyle choice, as due their end-of-the-month payments. Should We go out and eat Lobster tonight, even though We could stay home and eat Hamburger Steak?

It is not that Americans are in a massive amount of Consumer Debt. That is a Given, and relatively necessary for a functioning economy. There are Those who would contest this declaration, but they lack a replacement evaluation. There is the factor that if Everyone purchased the cheaper Products, these Products would rise in Price, while the Price of luxury would lower. That is simply an economic fact, and need not be contested. Buying properly does make being Poor far more sustaining, while making it easier to be Rich. There are Those who feel there is something Insulting within this Statement. Consider this Aspect: the Poor should be much more self-sustaining, and it should be easier to be Rich; Hint, this makes it easier for the Poor to eventually become Rich.

The real Problem with this over-rich Buying comes in the form of debt service to overall Income. Those bills take too much of a chunk out of monthly Income. They also rack up too much Interest on unpaid balances. One cannot buy High, and pay even Higher, on a structurally-limited Income. The later is where Income will not rise faster than the Inflation rate, and may even fall under the obstinance of Management. Every Income-Earner should have estimated the amount of monthly payment for debt they are capable of paying, and take active measures to stay at, or below, this level of expenditure. Economists would disagree with me on this, but I find this effort to be the most important element in economic recovery which is sustainable. lgl

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