Americans Will Shop Till the Dollar Drops
"Production and consumption are by no means interchangeable. Production is the means, consumption is the end. A society can no more consume its way to prosperity than an individual can. However, just as an individual can consume himself into bankruptcy, so too can a nation." Americans are not producing wealth, but merely consuming the wealth produced by others. When Americans go shopping this Christmas season (primarily spending borrowed money on imported goods), classic economic theory holds that the principal benefit goes not to the U.S. but to those who supply the goods. In exchange for their production, they receive interest and dividend paying assets (dollars, bonds, stocks, etc), which should provide future wealth. Americans in return accumulate depreciating consumer goods and piles of external liabilities that must be serviced and repaid. So Americans squander the wealth of their parents while their vendors amass it for their children. Americans will soon learn that they can keep shopping only as long as foreigners continue to support the dollar. When that stops, these sanguine economists are in for a rude awakening.
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