Interesting Piece... thanks for putting it out here for us.

Regarding spending and wages, I think the VAST majority of us are at near level incomes but have experienced terrifying increases in the cost of goods and services over the past 10 years. Many individuals' property taxes and insurances alone have increased over 1000% in the same period.

Like anyone, I wish for a palace with a view in Camelot, but we're atop a bubble that is ripe for bursting, yet still we demand more and more goods with ever diminishing capability to pay. With total taxation (including "through," taxes), at 57% or so, predatory lending being practiced by every bank & card issuer and the cartel that is our government demanding ever more "squeeze," we stand little chance for improvement.

God bless and protect our children, as they are set to inherit our debt and our long irresponsible behavior.

Thanks for listening,
Veronica

chicken little was wrong and so are you.

debt is the engine that produces wealth. money is just an iou for something you havent bought yet as soon as our politiians realize the imagrants they are kicking out are the ones buying houses things will recover. die owing everybody money!
apple will have a great quarter and the nex will dwarft it if you cant buy a phone invest in apple and wait 3 months

"debt is the engine that produces wealth. money is just an iou for something you havent bought yet" taojones

Sorry, but PRODUCTIVITY is the engine that produces wealth. DEBT is the murderous element that prevents growth and steals opportunity from us all.

Has your income grown as much as your taxes or insurance? I don't think so, unless you are the government, an insurance company, an oil company or a credit card issuer.

Veronica ("chicken little")

Well with huge trade deficits, outrageous national debt, exuberant war spending and rumor of more wars, homes losing value, lost equity, over leveraged mortgages, high credit card debt (with high rates), crumbling infrastructure, unaffordable health care, overpriced insurance, volatile oil and gas prices, recalls all over the place, and now food prices going up. We're beginning to wonder do we heat our house or eat? Forget buying anything extra or going to restaurants, or entertainment, the US consumer is kicking into survival mode. We'll have Christmas with the lead based Grinch this year.

Veronica,

if i'm a home builder and i "produce" 12 houses and have to wait 25 years for my customer to save the money to buy it or for that matter if i make 1 million i phones and have to wait for At&t to sell the ones i shipped them before they order more there would be no wealth for anyone even the dollar in your hand is an iou look a t it its a a note! a check from the federal reserve. your economic model would put us into the stone age. (i am for reasonable limits on interest rates )

go read Carroll Quigly's "tragedy and hope and when you understand something about debt write me back

TaoJones,

You have my apology and I should have spoken more accurately, or at the least, more in-depth when I was describing "debt."

I didn't mean the "normal, reasonable, capable of paying it back debt," that is the lubricant of our economy. I totally agree with you in that context.

I was referring to the "drowning in debt," overreach and accompanying interest rate punishment we are experiencing as a nation. Our economy, (along with our productivity), is at the verge of collapse from "that kind," of irrecoverable debt.

Again, sorry for not being more specific in my previous statements.

Respectfully,
Veronica

TaoJones, Money earned is not an IOU it's payment for product and/or service. Money in hand can be used to purchase a tangible asset or to hold and grow in an investment (another asset). Debt is buying something with the hopes of paying it back with interest attached (it's an IOU, liability). If you purchase an item (by borrowing) that depreciates and pay off the debt with interest, you've paid much more for your depreciating asset. If you use debt to buy something that appreciates, with your interest rate, you'll either break even or gain from that debt. But either way you look at it debt is an IOU (liability) until it's paid in full, money in hand is an asset. Extreme debt and continued compounding debt is a liabilty, especially if it can't be paid off and it's not securing something that's adding value. Our government and many credit card holders, have extreme debt that can't be paid back on items that are losing value. That's the problem in a nutshell. Even leveraged debts (mortgages and equity loans) on housing is now having the same problem, now that houses are going down in value and losing equity. Debt is a liability, and tangible items, investments, and services are assets. If your liabilities outweigh your assets that's when there is a problem. To find out where you stand financially use always subtract your liabilities (debt, IOU's) from your assets (items, investments, cash on hand) and that is your financial worth.

goods in hand is an asset… money or more accurately cash like i said is a future asset. (a good to be purchased at a convenient time in the future inflation is scary because it diminishes the size of our future asset debt can be smart if you pay back the debt in inflated dollars but a dollar is definitely an iou just actually read the bill in your hand it is a promissory note for whatever it actually no longer says since mr nixon floated us of the gold standard its value is solely based on your faith that you can buy something tomorrow with it but in reality an i-phone in the hand is worth two in the bush family compound
this is illustrated by a careful inspection of the language a bank uses when you make a deposit (your deposit is a debt to them) it is very useful to understand that money in hand is a vacuum into which goods will eventually flow.


thanks for the apology veronica i like snappy repartee!