Monday, May 02, 2005

Training Up Good Consumers

Banks and Credit Card companies have gone to great lengths through the years to convince us how indispensable debt is as a part of our financial planning. They have also worked hard at selling us convenience, and how it can make our lives better. We know what they are telling us isn't true, yet we follow them anyway. Why do wealthy people use credit cards, and carry balances on them? There is a cognitive disconnect between rational financial decisions, and what we actually do. This is a result of many years of influence of John Maynard Keynes, the British economist that taught supply side economics and discouraged saving. Our government is now hooked on this idea - spend, spend, spend. It is good for the economy, and we have listened.

This is certainly an outgrowth of the idea of using a fiat currency, a system that has always resulted in runaway inflation and failure of the monetary system. It is a system that relies on debt.

We were trained to be good consumers from a young age. Take a game by Milton Bradley, for instance. This game, called Mall Madness for players 9 years and up, promotes going to the mall and spending your money as fast as possible. The first one to get back to the parking lot with their items wins. How do they get their money? By inserting a credit card into the bank slot. No need to go to work, get an increase in your allowance. Just rely on the endless availability of money from the credit card. This game has been primarily marketed to girls, which socializes them to be the consumers. In a day when middle class families can't survive without both parents working, this is a recipe for disaster.

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