Keeping the Economy Up

Being able to buy more could mean that most people will be giving out a hand in keeping the economy up. As well, buying more and big could as well mean that the normal person will work into boosting the macro-economy, but this will only be useful in the short term for the economy and possibly be dreadful for people in the long term. It could end up draining bank accounts and many other things.

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“More and bigger cars, pools, houses, lawns, televisions, and all-terrain vehicles may boost the macro-economy in the short term but they eat away at our own personal bank accounts and the finite treasures that make up the earth.”(Levine)

In his documentary, James D. Scurlock highlights this in close relation to American families as well as society. With the belief of having to spend large, Americans are coerced into getting loans as well as buying even more on credit. This he terms is a problem that is escalating the U.S consumer debt crisis.

In his weightiest emphasis, he terms the end of the spectrum as rooted in risky abuse. This is mainly because the capital lenders will cajole the poor families into taking loans with the assumption that they are manageable. As well, college students are sinking in debts with their placing of huge numbers of credit cards and no real inflow of cash.

He also highlights the tragedy in its extreme; where the only way out for debtors who have sink thus far in debt have suicide as the only plausible exit. In the film’s many interviewees, Elizabeth Warren, a Harvard University financial analyst, holds forth on the profitable high-interest mortgage banking. The former debtor and Christian radio host Dave Ramsey as well delivers some tough advice to people burdened fiscally. He offers the advice from his own experience.

With all this, the consumer now does not have an option of keeping their savings up. This is mainly because they are always sure to access another hard-to-pay loan and sink even further into debt. In the 1990s, when there were high levels of unemployment as well as high interest rates, the savings ratio was high. The recent years have seen a fall in the savings ratio. This is because the consumer borrowing has hit an extreme record. This can be in part due to the rising cost of houses.

Geoff Riley of Eton College writes, “…saving represents a decision to postpone consumption by saving money out of disposable income. Why do people choose to save their incomes? There are many motivations for saving.”(Riley)

Today, it seems as though people have forgotten the real essence of saving vis-a-vis consumption. They no longer understand what it means to postpone their consumption.

There are different reasons and purposes of savings. People may decide to save as a precaution. This could be because of sudden loss of employment. When they decide to go for a nest egg saving scheme, they are able to have a smooth spending even when income fluctuates.

Some people save as a method of building up the potential spending power. This is by deferring today’s spending for financing future commitments. This could be saving to get the deposit for a mortgage, a can or even planning for a wedding. They also save for pension.

At times, people opt to save because there are higher incentives by lending institutions. One other reason is to bequeath wealth to future generations. Most of the spending is within the younger generation who yearns for property as well as finance education. They also have some expensive consumer durables. Older people have more income but less spending.

With the current rise in spending among the younger generation, there is a need for a more holistic approach to minimize the need of spending more than an individual can afford. This is mainly because the future generations are going to be the ones to move with an ailing economy. The ills of this could result to an indebted society that has no option to minimize spending and save for whatever purchases in future.

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