Save your money to control your destiny. Don’t spend money you don’t have.
2 comments May 9th, 2009
Countries that don’t make things are colonies of countries that do. So when we decided in the U.S. to stop making things and base our economy on consumer spending — we began to give up our riches to other countries who bought our massive debt so we could go on a massive spending spree. Some 70 percent of the U.S. economy today is consumer spending, mostly on goods we do not make.
We were told not to worry, just go out and spend, spend, spend, charge, charge, charge, and spend some more.
Meanwhile we stopped saving — in 2005 Americans, not their government, spent 2.7 percent more than they earned. That’s called a negative savings rate. The virtues of thrift that Ben Franklin taught went right out the window. Patriotic Americans had a duty to spend all their money, then borrow some more. Just like the government under George W. Bush, who doubled the national debt from $5 trillion to $10 trillion in 8 years, with nary a word of criticism from his fellow Republicans who ran Congress for all but two years of the reign of Bush The Lesser.
Unfortuantely, Barack Obama has picked up on the deficit spending and multiplied it. We’re spending like there’s no tomorrow — as a government, that is.
But this story in The New York Times details the fact that we are again becoming a nation of savings. Our savings rate has gone from zero to 4 percent, still not great, but better than zero, which is what it had been before the recession began.
That’s a good thing, right? The more we save, the more we control our own destiny. We can pay cash instead of charge it. And we can have a nest egg for when times are bad. Ben Franklin would approve.
Well, no. We are supposed to spend to fix the economy. But now that we don’t have so much, and we are saving again, we’re not going spending like we’re crazy.
So the story concludes that we may not get back to where we used to be — spending money for no reason at all on oodles of stuff we don’t really need — and stuff that was made in China anyway.
My advice: Keep saving. Encourage Congress and the president to set a national policy of returning to a manufacturing based economy, which is where we derived all that money we squandered in the last three decades.
We don’t need all the junk they sell at the Big Box store.
Save your money so that when you buy a car, you can make a big down payment and can borrow less. And etc.
