Material World

Looking at the current economic crisis ... and both government spending as well as the general consumer habits over recent years it can definitely be said that 'we live in a material world' as the song goes....

But what has taken it to the level that it has reached? Certainly throughout the ages people have sought a comfortable life ... but what was it, when was it, that the norm shifted from living comfortably within your means, to living extravagantly beyond them?

William Shakespeare once wrote "Have more than thou showest; Speak less than thou knowest." ('King Lear', Act I, Scene iv) ... and while iirc the context was a little different I think that the quote aptly applies to most aspects of life. Financially speaking a family that lived moderately within their means and set aside savings would, in fact, have more than they showed ... and more importantly would likely live comfortably and have a better ability to maintain that lifestyle even in lean times.

In part I think that this is simply something that the older generations have understood better than many of us do today. Face it .... in the grand scheme of things it wasn't that long ago that a lean harvest might well mean that some people in the village didn't survive ... setting aside today's plenty for tomorrow's want was something very real ... and was the beginning of drying and otherwise preserving foods.

Today, however, that never seems to be an issue ... I'd say probably 90% of the population of the US couldn't tell you if it was a good or bad year for the crops, even based on store prices. Part of the result is we don't think about putting things aside for tomorrow, and I think that has translated into our financial habits as well ... and now we're starting to pay the price for that.

Two other factors have, of course, contributed greatly to this lifestyle of living more extravagantly than perhaps we should ... television (and to a lesser degree radio) and credit cards.

Television and radio have, over the years become more and more inundated with advertising and at the same time more people have joined the audiences of these forms of media. We are constantly bombarded by advertisements showing us the luxury and 'cool' gadgets available. The shiny new cars, the great looking food, the new and beautiful appliances ... the result is, naturally, increased desire for these items.

Radio and print ads are less effective at this largely because the moving images of television are much more pervasive to the human mind; they are alive and, thus, much more real to us.

Credit cards take this desire built by the media and its advertising, however, and give it an outlet. You don't have to have the money to pay for that new iPod now, you've got plastic fake money! And there starts the root of the problem because too often people don't view credit as 'real money'; they don't connect the charge of the item to the money that they are going to have to pay later. Usually the considerably larger amount that they will have to pay due to interest.

Credit has, of course, been around for ages, but really it has only been recently that it has become so widely available. The result is, of course, that a lot of people have received credit that were not really prepared for it ... and in some cases should never have really had it. Combine that with the recent popularity of 'micro-transactions' that make it even easier to spend large amounts of money without realizing it and you have a recipe for disaster.

For those not familiar with the term Micro-transactions it is basically things along the lines of iTunes ... transactions for (usually) virtual items at low dollar amounts. Given the 'normal' cost of items most people don't think much about spending 1 or 2 dollars for something ... it's just a little change, it won't make any difference....

But then they realize that they've downloaded 300 songs in a month at $1.50 each ..... and that $450 suddenly seems like 'something'.

The same thing applies in DC ... it's just $200,000 for this program, that's nothing. But when you cram a couple of thousand of those into a bill and the price tag goes up fast...

The problem is ... this is not a sustainable situation in our personal lives and it's not sustainable in DC either. Sooner or later that money has to be repaid ... sooner or later the interest will bury us.

At what point do we reach critical mass? At what point does the fact that the Federal Government is competing with business for the same loan money completely demolish what is left of our economy?

At what point do we realize that what we NEED to do is stop the deficit spending and get back to a responsible method of accounting on a personal level as a society ... but also on an economic level as a country ... if we don't things will not go well for us in the long term.