Busted: Bankers and The Global Economy

June 13, 2008

National Dependence on Consumer Credit

Credit plays a central role in the working of the U.S. economy. The U.S. economy has come to rely almost entirely on consumer spending as an engine of growth, accounting for about 70 percent of national gross domestic product.

Some would say that credit is the lifeblood of the American economy. The truth is that banks have made credit financing the lifeblood because bankers and financiers have made expansion for the U.S. economy possible beyond what would normally be possible. The idea isn’t a bad thing in and of itself when used in moderation. However, like a crack addict, the national addiction for credit has spiraled out of control. The end result is that financing has been used to bolster pricing and industrial strength for the last thirty years or more resulting in an ultimate impasse.

The impasse is that because of wages and economic weakness caused by financing virtually everything combined with undermining the economy solely for corporate and personal profit, the economy is no longer able to sustain the same level of financing and high prices. As a result, a market crash or at least a spiraling drop in prices must occur to balance the inequity. Part of what the nation is seeing now is a balancing of this inequity.

Well-entrenched business must realize that old business ways must change in order to survive the recession. Expectations must be lowered. For example, the auto industry must develop new approaches to power vehicles and lower prices. Consumers, in general, can no longer afford to buy high priced products on credit, depending instead on wages to sustain them and making due with less. This is one side of the economic picture. In general, a large portion of the American populace has become a generation of struggling underachievers as a result of economic land mines in their life.

The Federal Reserve and federal government is trying to come up with creative ways to “inspire” the economy. Unfortunately, the very regulations designed to encourage actually discourage and destroy. The government has overstepped its’ bounds and because of this, is reaping the reward now and in the future for itself and the people.


Create a free website or blog at WordPress.com.