More than a few people are saying that since Washington has seized up, our only hope of jump-starting the economy lies with the Federal Reserve. Specifically, the Fed ought to fire up the printing press. Moderate inflation would encourage consumers the buy now, before the price goes up. Given that consumer spending accounts for 2/3s of our economic output, getting people to shop again is essential. Inflation would also make yesterday's debt cheaper tomorrow, a boon to those whose bottom lines keep them out of the malls and off the car lots.
This appears to make sense, but at another level, it seems seriously misguided. Sure, stuff breaks down and needs to be replaced, but let's be honest. If you can read this, you're in the top 97th percentile of the human race in terms of wealth. You don't really need to buy anything beyond food, clothing (only when your old clothes wear out), and shelter (No, it doesn't have to be a McMansion).
It's perverse. If we were all to do the right thing--save, save, save, don't borrow money, and discover the happiness inherent in simple living--then we'd be consigning a significant portion of the work force to idleness for years to come. I think the Dave Ramsey lifestyle is great, but one reason why it works is because it plays the rest of the population for suckers. They buy stuff; you buy shares in the companies that sell them stuff, and you, of course, come out ahead. But if we all got religion at the same time...
So, do we actually have a moral obligation to the less fortunate to drive Hummers and live in 4,000 square foot houses? Should policy makers encourage such irresponsible behavior?
No, because, beyond next month's unemployment numbers, there's a bigger crisis looming--the ecological crisis that our baroque lifestyles are slowly building toward. Are those our only two choices? A decade or more of economic pain, or an apocalyptic future for our grandchildren?
Makes me wonder about the ability of old wineskins to accept new wine. How do you create jobs in a low debt, low consumption economy? There may be an answer to that question that doesn't involve pain and suffering, but I doubt it.
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