Day of Reckoning

# 002 February 27, 2009

Well, the DOW finished below 7100 today, and the S & P ended with a new bear market low… where are we headed? This was the worst February on record, it’s a good thing this is the shortest month of the year. Will March come in like a bear and go out like a bull?

You know, I was thinking. What happens if the American public makes a collective decision to not stay the “consumer” driven society we’ve been for the past generation. What will become of our economy if we become savers again… this very thought strikes fear and anguish in the hearts and minds of our political leaders. Why do you think this is?

Is it because we cannot be controlled if we are not totally in debt? It’s often been said, he who pays the piper calls the tune. What happens if we quit paying the piper and start keeping our money? Do we really need to drive one to two year old cars? Do we have to have the latest fashions, jewelry and so on? What happens to the economy if we all start washing our own cars, cutting our own grass, filing our own fingernails?

Imagine for just a moment what would happen if every consumer in America (which is not just adults, but teenagers and children) cut their non-essential spending by 10% or even 15%? Most people are not aware that consumer spending accounts for 70% of all U.S. economic activity. We are not a nation of producers and manufacturers, we have become a nation of spenders. Madoff has nothing on the American economy. Don’t believe me? Here’s the link to the Wall Street Journal article:

http://online.wsj.com/article/SB123574078772194361.html

Take a few minutes to think about this. For years we have heard that Americans are on a path to economic hell because we do not save. A couple of years ago the cry became louder when we became a nation of net borrowers and our savings rate dropped below zero. I’ve heard numerous radio ads telling us to “feed the pig”, a government funded advertising campaign exhorting us to save more. Now, guess what? Americans have started saving more due to fears about our economy. What are our leaders telling us now? “DON’T SAVE… SPEND! If we don’t spend the economy is doomed…” so what’s it going to be, save or spend?

Our leaders seem to be telling us to do both… sound a little schizophrenic to you? Guess it really does reiterate the time worn concept of “government intelligence”.

Why does the Federal Government want us to spend… maybe it’s to increase…. TAX REVENUES! Hmmm… could that be it? Just asking.

Maybe we should start thinking about what is going on a little more than just reacting to the latest news each day. Give what Thomas Sowell calls “thinking beyond stage one” a chance. Spending all your money today is fine… if there is no tomorrow.

We need to think beyond today and consider, “what is the logical result of my actions”? Of course, if we take no responsibility for our actions, then why do we need to consider the logical result of our actions? The key word is think. Aldous Huxley said, “They intoxicate themselves with work so they won’t see how they are.”

Our consumer driven society has done the same, “They intoxicate themselves with things, so they won’t know how they really feel.” We have refused to consider (think about) the results of our actions and we move forward blindly as though we will never have to take responsibility for our debts, both financial and emotional.

The “day of reckoning” it seems, may be at hand.

What path will we choose – personal self reliance and responsibility, or will we relinquish our authority to an increasingly powerful government? We are at a crossroads…

With warmth and regards (as always),
Allen

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