It is far too easy to blame in
bad times, or thank in good times, Wall Street, the government, or super-rich and
powerful financial entities. In
actual fact, it is always the spending of money by the general population on
consumer products and services, housing, cars, or investments that drives the
economy. The core problem is that
the public does not act in concert to serve its own interests but, instead,
takes its cues from the external world and puts its trust in the wrong people
and entities.
In other words, besides all the
blame that rightfully can be heaped on many others for the current recession, it
is also true that the public through its dollars drove the nation and the world
into the current meltdown, mostly by using far too much borrowing. They got suckered into using easy
credit. True, in many cases, they
acted on incorrect and intentionally misleading information and were taken
advantage of. But so much of this
consumer behavior was driven by greed or stupidity. Confidence was placed in government
regulation, Congress, mortgage and other financial companies, banks, and more
generally in the plutocracy that runs everything that matters. We had delusional prosperity because
most of the population had willingly let themselves be deluded or manipulated by
the power elites running the government and the economy. In essence, consumer power was usurped
or pirated by the worst people in our society.
Here is the most critical
fact. Consumers control over two
thirds of the economic activity of the nation. Long before the current economic
meltdown I kept writing about the potential political power of consumers. To get desired government actions,
millions of consumers could threaten to cut their spending in order to get
actions, like stopping the Iraq
war or impeaching George W. Bush.
But without leadership consumers just kept borrowing and spending,
maintaining the delusional prosperity that they themselves propelled. Now they must act to fix things.
Now that the economic meltdown
has hit us very, very hard it is critically important for people to understand
that depending on the usual power groups to turn the economy around is
dumb. Thinking that President
Obama, Congress and various federal agencies, in particular, will save us is
continuing the delusional thinking that has been like a chronic disease.
American consumers must
understand that literally within days and weeks THEY themselves could turn
around the economy. I was struck by
data from the Federal Reserve that there is, even after the grotesque economic
meltdown, presently a historic amount of cash in bank and money market
accounts, an astounding $8.85 trillion.
Look at that number again.
Relative to all the government bailouts and likely actions to stimulate
the economy, that number is remarkable.
That humongous amount of cash (not the value of homes and investments)
comes to about $29,000 for every man, woman and child in the nation, or roughly
$88,000 per household.
Your first thought may be “I
don’t have that kind of cash!” In
fact, economic inequality has risen terribly in recent years, helped by various
public policies, making the affluent rich and the rich super-rich (and most of
the middle class poorer). This
means that much of this national cash belongs to a relatively small fraction of
the population, perhaps 20 million-to-30 million people.
No matter how much cash we have,
we must put our faith in ourselves more than the government or the business and
investment sectors to turn the economy around. The more cash you have, of course, the
greater your potential power to push economic recovery. We often hear about consumer
confidence. Whether people are in
the mood to spend or whether they have become too afraid for their personal
financial security, causing them to spend as little as possible.
To turn the stock market and just
about every segment of the private sector around, 10 million-to-20 million Americans
must grab their inherent consumer power and start spending and investing with
gusto, from home appliances, computers, cars, clothing, furniture, new homes,
travel, and so on.
The stock market would
immediately start to climb up, retail stores would stop closing, the automotive
sector would resume producing cars, companies would start rehiring and the news
media would start pumping out good news that, in turn, would trigger still more
consumer confidence and spending.
Suddenly, a positive spiral of economic activity replaces the hoarding of
cash that has driven the negative economic spiral.
Think of that number $8.85
trillion again. Think of it
relative to the billions and trillions constantly talked about to spur economic
recovery through bailouts and other government actions, all of which must
somehow channel money into consumers’ pockets or make credit for them more
available. A modest fraction of all
that cash, say a quarter, has the economic power to do more good than anything
the government does. Better than
all those government actions is the absolute certainty that rapid increases in
consumer spending and investment would definitely drive the economy
upwards. Positive consumer
confidence can feed on itself psychologically, become a viral message that
shoots the economy forward, reverses unemployment, makes stocks and mutual funds
and, therefore, retirement accounts more valuable, and so on.
We sure could use some national
leadership that motivates and inspires use of consumer power, rather than all
the blabbering about what the government should or should not do. Americans have the choice to depend on
politicians or to depend on themselves.
Either use YOUR cash-power or remain victims of greed and corruption, as
well as the inevitable incompetence of politicians and government
officials. Consumer power awaits
you. The nation needs it to avoid
still more massive federal deficits and borrowing and inevitable tax
increases. We the people must do
more than vote; we must use our dollars to save our own financial health. Unless we shift our thinking and spend,
we will stay in economic hell for a long time. We are the economic stimulus solution
we’ve been waiting for.
[Contact Joel S. Hirschhorn
through delusionaldemocracy.com.]