"My Stuff," Inflation and Depression: When Consumerist Gods Fail (May 8, 2009)
A central tenet of the inflation model is that underproduction will lead to shortages of tangible goods which will feed a spiraling inflation. Maybe we have too much stuff, too much debt and too few jobs for that to occur.
The key conceit of a consumerist economy is that "my stuff" is the most important indicator of my status, character, values and identity. The roots of this conceit stretch back millions of years, of course, as Nature confers reproductive advantages to those with the brightest feathers, the glossiest coats, etc.
On the other hand, as Henry Kissenger famously observed, "Power is the ultimate aphrodisiac," which suggests feathers and fluff purchased and adorned might not be the end all to be all in reproductive success.
The other key factor in a consumerist-based identity is that someone profits by selling you an identity, character and sheen of status. The idea that what you wear, drive, tattoo yourself with, load on your iPod, etc. has zero bearing on anything meaningful about who you are and what you value is sacrilege of the highest order.
If "my stuff" is no longer "me," then who and what am I? And indeed, what can I sell you if all you really need to be "yourself" and happy is friends, minimal shelter, unprocessed food, homemade music, a library and an Internet connection and spiritual communion/worship? I mean, come on, pal, how much profit can I make selling you a used guitar, a DSL connection and a bag of carrots?
The inflation thesis depends at least partially on the laws of supply and demand. In general, the basic idea of inflation is that too much money starts chasing too few goods. An oversupply of money (printed, borrowed, etc.) and an undersupply of goods leads to the "price" (in the inflating fiat currency) rising.
Wage earners find their fiat currency no longer buys what it used to, and they demand wage increases, which then trigger a wage-cost-price spiral. At least this is the "classic" view of inflation, and some observers believe the global credit crunch is wiping out much of the world's vast over-capacity to make millions of things.
In other words, as factories no longer can sell on credit, they shut down and pretty soon there's not enough stuff to go around. People then bid up the price of what stuff is available, kicking off a self-reinforcing cycle of inflation.
All that makes sense, but suppose we not only have too much stuff, we don't even need 90% of what we already have? Consider vehicles. The general theory is we can stop buying 16 million vehicles a year here in the U.S. for a few months or maybe a year, but then cars will starts expiring by the millions and "consumers" will have no choice but to borrow $20,000 and go buy a shiny new vehicle.
Hmm. Ever seen photos of Cuban streets in the 90s? The ones with the 1950s-vintage American cars? I can assure you I will not need another vehicle for 10 years, as I own one vehicle, a 10-year old 1998 Honda Civic which will easily last another 10 years and perhaps even 15. Lots of construction types have "beater" trucks (yes, U.S.-made) which continue to run a decade or two after they "should" have been replaced.
The pundits declaring that autos will have to replaced must live in very tony neighorhoods. If you don't mind various electrical problems, duct-taped fenders and an engine light that flickers on and off, you can buy an old American car for a few hundred bucks which might well last for many years despite its dilapidated exterior.
Contrary to the belief of those who worship the false gods of consumerism, a stupendous number of essential items last a lifetime. Yes, dishes do break but if you're careful they don't break very often. Millions of people use the same set of dishes they had decades ago.
Ditto musical instruments, books, kitchen knives, bicycles, saws, clothing and a host of other goods which worshippers at the altar of Consumerism declare "obsolete" as matter not of fact but of belief.
Yes, barbeques made in China will rust away in short order, and so sturdier models may well command a premium. And yes, a teen's second or third iPod will stop working when it's dropped in the toilet, or it may be stolen.
But since everyone's cellphone already stores music, and cheap MP3 players abound, then can we really count on a resurgent BBQ and iPod economy to power U.S. (and thus global) growth?
1. Less collateral to borrow against (house values declining)
2, Less income (from hours cut, salaries cut, overtime cut, fewer people in the household working, falling self-employed income, smaller bonuses, etc.)
3. Higher cost of borrowing
4. Higher taxes and government fees as the State (all levels of government) seeks to fund unsustainably generous public pensions and various parasitic fiefdoms as tax revenues decline.
All of which means people will have a lot less surplus money or credit to spend.
Add in the possibility of a dollar collapse which would instantly raise the cost of all imported goods and you get a potential fifth drain on personal surplus income.
Then there's the 33.33 million garages stuffed with perfectly functional goods throughout America. OK, I made that number up, but there are 75 million households in homes and tens of millions more in apartments and condos, many of whom have storage lockers crammed to the rafters with stuff.
The consumerist credo is based on functional, technical or style obsolescence: the idea that something which works perfectly fine should be thrown out or shelved. Is there any field more prone to all three than electronics?
Yet many technologies are running up against severe barriers--not of speed or memory but of marginality. The gains to be had by buying a new, faster processor are so marginal as to be essentially worthless. Ditto the memory increase in new iPods, new "features" (a.k.a. complications not worth exploring) in cellphones, etc. Is having 4,000 more songs at your fingertips really worth hundreds of dollars? I mean, really, who has time to listen to 4,000 songs anyway?
It boils down to this: when you run out of money, you switch religions from Consumerism to one of the good old spiritual standbys. The entire notion that demand for more stuff will drive inflation presumes people have enough money or credit to fund said demand.
It also presumes that the contents of 33 million garages and storage lockers are all truly obsolete rather than merely unfashionable/technically obsolete.
It also presumes people won't choose to "make do" with the sofa, sheets, doilies, skis, toaster, lawn mower, grill, etc. they already own (or own in quantity).
Lastly, it presumes people don't wake up from the 60-year postwar nightmare known as Consumerism (see under "false gods and idols") and awaken to the fact that the known keys to happiness require little to no consuming (of new stuff). To wit:
3. free time to pursue interests
4. spiritual communion/worship
7. meaningful work (unpaid qualifies)
Yes, we all need shelter and food and utilities, but with 20+ million vacant houses in the U.S. then shelter is not a physical problem, it is essentially financial and thus political. Ditto food, which is still in surplus in North America.
As for utilities: the U.S. government could pay all the utility bills in America for a sliver of the cost of TARP, TARF, BARF and all the other bank bailouts and corporate/union giveaways it is busily borrowing trillions to fund (all to no avail--check in a year from now to see how all those "green shoots" fared).
But what will we do if nobody's borrowing and spending trillions of dollars on needless
stuff? What everyone else in the world with little money and lots of free time does-- something
else. (See above list for suggestions.)
"Good faith" may have limited application in contract law, but it has no place in constitutional law. If you flout the highest law of the land, especially if you are a top-level decision-maker, you should be brought to justice. If you provably condoned, approved, and justified torture against established national and international law, you should be prosecuted.
And a darned clever new poem by Mike Dakota:
IF ROMEO AND JULIET
"This guy is THE leading visionary on reality.
He routinely discusses things which no one else has talked about, yet,
turn out to be quite relevant months later."
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