From Consumption to Savings

Sobering post over at Motley Fool this morning. The author is laying out the argument that we are in a seismic shift in the United States, as big as the shift from agriculture to manufacturing. It is the shift from an economy based on mass consumption to one based on savings.

Most of our accounting jobs, advertising jobs, architecture jobs, engineering jobs, legal jobs, sales jobs, government jobs, and many other professions and occupations are simply funded by massive domestic consumption. As the fed continues to implement policies cutting off credit and raising interest rates on the private economy, consumption is sure to contract going forward as interest payments suffocate dollars away from good and services and more to savings..

None of this is the end of the world....simply massive convulsive change that you should now be prepared for as we are still in the early stages in 9.09.

Where it goes is anyone's guess...but you know it is going in that direction as the value of practically everything you own is crashing and we are bailing out bankers.

The big question comes with the BIGGEST consumer of all....the U.S. Governments...consuming $6.5 trillion dollars per year (50% and growing percentage of GDP)....right now running a $2 Trillion dollar deficit is supporting an unsustainable level of spending.....soon it will come to an end one way or another as receipts keep shrinking....and when it does at you will be prepared for the change....whether that is a benefit remains to be seen.

Overall, the Motley Fool is pretty apolitical, but you read the writing on the wall when you see that closing paragraph. We cannot spend our way to prosperity - the end of that road is Weimar Germany and Zimbabwe.