Americans love us some gewgaws.
Sometimes they seem really cool, but they are essentially worthless trifles, trinkets, baubles, knickknacks and whatnots. When you realize you’ve been snookered, they invariably end up taking up valuable space in your garage or basement and eventually getting dumped in some landfill somewhere.
That is unless you’re a hoarder, that uniquely American affliction which like morbid obesity, heart disease and diabetes is yet another disease of “affluence.” If you’re one of them, you accumulate gewgaws until your house is choked floor to ceiling with junk. Then you get to be on TV.
If you want to get a sense of the proliferation of gewgaws, watch any late night infomercial or tune in to the QVC network sometime. Both are notorious for separating shopping addicts from their hard earned money.
A juicer… That’s a gewgaw. Remember Ginsu knives? gewgaws. Even the latest hi-def television with some minor new doohickey upgrade that’s marketed as the “be all end all” is a gewgaw as far as I’m concerned. The reality is that millions of consumers line up every day to obediently tithe their wages to the QVC’s and Home Shopping Networks or the bricks and mortar equivalents at Target and Wal Mart for more worthless junk.
Here’s some of my all time favorite gewgaws…
1) The Rejuvenique Electric Facial Mask ($65.00): You too can look like a Friday the 13th serial killer while electrocuting your face with the Rejuvenique. The pitchman says that while you’re luxuriating comfortably in your monster freak mask, it will be like your face is doing sit ups.
2) The Face Flexer ($29.00): Maybe this one’s to counteract the effects of botched plastic surgery? Who knows. But there’s actually a “regimen” they say… Only 2 minutes in the morning and two minutes at night. What the actual benefit of the Face Flexer is, is anyone’s guess… A toned chin? Muscular cheeks? A stiff upper lip?
3) Speedfit Speedmobile ($5999): This one is my favorite and the hands down winner for the most absurdly hilarious, pointless and asinine product of all time. Instead of running on a stationary treadmill in a boring gym, get outside and run… on a mobile treadmill (a treadmobile)… with wheels…that propel you… just like jogging! That’s right, you make running movements on this thing and actually move! Fiendishly clever! Devilishly magic! Mind-boggleingly redundant!
Okay, that was fun, but there’s a serious point here:
Keynesian economists are constantly pushing debt on society because it sparks demand for more stuff… More worthless gimcracks and fandangle’s like the nonsense you see above.
President Obama’s Economic Adviser Larry Summers, said as much just yesterday in the Washington Post when he gave us his “hair of the dog” theory of financial recovery:
“The central irony of a financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it can be resolved only with more confidence, borrowing and lending, and spending.”
Summers’ view is that households are deterring outlays on durable goods because all of that phantom wealth that disappeared from losses on housing values. No quibble there. The solution from Summers, Paul Krugman and other Keynesian debt pushers however is to fire up the consume, spend, borrow and lend machine all over again. It’s insanity.
As Charles Hugh Smith points out, the truth is that we’ve been living in a post-consumer economy since the 1970s. That’s when Americans for the most part already had most of the practical things they needed — a TV, a car, a phone, washing machines, microwave ovens, etc. Once that happened, real wages began to stagnate as the chart below shows.
Coincidentally, consumer debt began exploding ever higher right around the same time as the forces of financialization took over to corral us into buying more and more worthless crap. The only way to get us to buy more of said crap was to give us vast quantities of debt. As you can see from the chart below, the exponential nature of consumer debt accumulation since the 70s is simply not sustainable. No matter how you slice it, consumers are now entering the long, painful, process of debt destruction and repudiation.
There’s a reason for this. Our entire economy is now built on what many refer to as FIRE — finance, insurance and real estate. All require debt, so the only way to prop up what remains of this hollowed out economy is to add more debt fuel to the FIRE.
Whether its consumer debt or government debt to take up the slack from consumer retrenchment, the “more debt” solution isn’t going to work this time.
That’s because our debt loads are so high (350% of the nation’s GDP to be exact) that the deleveraging process to repair private balance sheets is going to take years. In other words, we’re not going to be spending again for a long time.
On Thursday, I’m going to show you what our debt catastrophe looks like in student loans and education and what you can do to avoid the trap.