Spending and Addiction to Debt

A chart that the Wall Street Journal tweeted a few weeks ago is worth revisiting.  It shows inflation-adjusted cumulative growth in household consumer spending from 1989 through 2012, contrasting the top 5% of households with the lower 95%:

Remind you of anything?  Both lines strike me as echoes from a chart I made a while ago showing different trends in the economy.  The top 5% line looks a lot like the total stock market value, and the lower 95% looks a lot like credit & debt, doesn’t it? (Click here for some of my theories related to this graph.)

I won’t go into how the Clinton administration worked to dislodge the stock market from the safe risk-mitigation of national debt, and how the Obama administration has worked to ensure that the folks in the top 5% made back all of their housing-bubble losses by letting them absorb all of the borrowed money.  The larger, more-nonpartisan point is the critical one, here.

We’ve let our economy become dependent on the national debt. After the Great Depression and World War II, debt became the main driver of growth.  During the Reagan years, the United States made a fair attempt at boosting productivity enough to chart a new course, but we never dislodged from debt.  This can’t go on, not the least because of the plain facts shown in the Wall Street Journal chart.

The wealthy are taking much of that imaginary money and cashing it in as tangible items and temporal lifestyle enjoyment.  As periodic stock market crashes prove, imaginary money isn’t very stable, and the Obama “recovery” has strongly suggested that all big losses will quickly be socialized, now, so that we all must take reductions to keep the rich in their glory.

Am I sounding somewhat progressive, here?  Not at all.  Progressive centralization and tyranny have gradually exacerbated this problem.  The solutions are to privilege individual initiative and work, again.  That means real cuts in taxes and elimination of vast swaths of regulation.

Progressives just can’t get their head around the reality that government is not how everybody gets an equal voice in policy.  It’s how powerful forces consolidate their power.  Everybody gets an equal voice when we come to the table as individuals able to interact in ways that privilege our value as human beings, not our ability to jump through the insiders’ obstacle course of hoops.

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