Quote:
Originally Posted by pbear19
If we were culturally different as a county though, it wouldn't have mattered how much credit was extended. ITA with PeppyGPhiB, it's an economic theory I've long held in fact.
For example, credit companies can (and have) dangle as many money carrots in front of me as they would like, but I still don't bite. Because I am a quality over quantity type of person. I actually enjoy my small, super-low-mortgage house. I could have gotten a loan for about three times what I took, and bought a huge property, but I chose not to.
I'm not saying that I'm better than other people, just different. My conservative spending doesn't put as much cash back into the system. But the cash that it puts in is all real, not credit.
I do think it's similar to the way that culturally we want as much as we can have for as cheap as we can get it. My boss mocks me for spending a few bucks more at the local store instead of going to the bargain discount chain store. But, it makes me happier to spend a few bucks more and support a local business. For the majority of Americans it's just the opposite. That cultural push for bigger, better, cheaper drives the market - it's the demand the meets the supply. Were there no demand for all these extra cheap things that we often don't need anyway (but we want them because they are cheap and because we want in general), there would not be the supply of credit.
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Yeah, I just don't see the connection at all - I think you're grasping for a literal connection, although I'll agree with a completely figurative connection if you'd rather just leave it as "people are poor consumers, and both ARMs and Wal-Mart are good examples of poor and uninformed consumer decisions" then I'll agree.
However, the psychology behind both is nebulous at best - the push for lower per-unit cost on goods really doesn't seem at all connected to a lack of understanding of proper income-based spending, the time-value of money and amortization . . . in fact, it seems "penny wise, pound foolish" which is antithetical to what you're saying.
Total trainwreck of a hijack here - my point is that I agree with the forest (so to speak) but not the trees. I see where you're going but disagree with how you're getting there. I'm not catching what you're throwing. I'm running out of hack metaphors - my bad.
However, this:
Quote:
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I truly believe that excess demand drives supply far more often than excess supply drives demand.
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. . . is true to the point of tautology for almost any system, and actually goes
against your point, in my mind.
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