Hey, my wife has a friend who has one room in the house just to store all the mail order crap that she hasn't opened yet. Obviously, she has never read any H.D. Thoreau, as in "I don't own the stuff, the stuff owns me". Anybody have any theory where this out-of-control consumerism came from? My parents and in-laws never did it. Probably yours' didn't either.
I'm the world's worst real estate investor and I own three houses right now that comprise 50% of my net worth. Sell!
Why would the average American do that when prices are rising nonstop and have been for almost a century. Do not discount the power of the consumerism advertising machine. Why would the banks do that and burn a hole in their pockets with reserves. Just take a look at the latest debt products, the banks will NEVER stop lending a fiat currency.
Consumerism is a key driver behind capitalism. Capitalism requires perpetual growth. The creation of "malls", shopping centers, store displays and open large glass window shops was actually partially engineered by the US government. There was extensive research done in the 1920s on behalf of the government to discover the best infrastructure that could drive consumerism & retail sales. It was a building of a new economy for a prosperous nation that had extra money to spend on luxuries. But the mentality had to be switched so that the "luxuries" became almost necessary consumer goods. Of course then the corporations take it a step further to create perpetual sales growth with "new improved" products. Ipod is a great example, a hot new toy that breaks after a couple years with new hot new models being pumped out every year. Apple can't even afford to make a durable Ipod, not because of the workmanship but the lost future sales & growth.
Actually, I'm in the inflation camp also. Many economists talk of the fork in the road where the U.S. does not any long drive the world economy. Some other, e.g. China, will pick it up. My guess is that we're at the fork in the road. Despite the fact that average U.S. household doesn't have the buying power to consume, the Chinese do (what is that - like 1 billion people eager to work 80 hours/week). If they want to buy copper, the price will go up. The other side of the equation is the debt service on U.S. Treasuries. Hey, if you can't pay it in today's dollars, make the dollar worth less. So we will have a prolonged bear market in U.S. dollar. (It's not like this is a novel suggestion). I remember reading a book by Jane Jacobs (recently passed) titled "Cities and Weath of Nations" published 1985. She had a section about monetizing national debt. Although the inflation of the '70s was quickly subsiding, she was forecasting more dollar inflation. I can't remember the wording. But to paraphrase "Once you get the toothpaste out of the tube, it's impossible to put it back. Nations that inflate, continue to inflate." My $.02
That's what your present dollars will be worth one day as the Gummint inflates and debases your currency... it's not the solution, but rather a scourge.
Mr. Hydroblunt, Thanks for the information. You definately know things about marketing. But I still don't understand it. Someone please help me out. Anecdotally, I remember attending my mother-in-law's 85th birthday party. We were at Lone Star Steak house, or some chain like that. She was not rich, but had a house for cash, and a decent CD/T-bill portfolio (along with the SS, pension, etc). Net worth: ~$1.25 Milllion She refused to order dinner for herself because she said the prices were too high. The house that I now live in, we purchased from an elderly couple. The house is simple, but those people had some capital (I estimate > 5 million). I remember seeing that old man cooking Beef-A-Roni for himself on the stove. Is marketing driving consumers to consume, or are all the baby boomers just rebelling against their parents?