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70% of our economy is based on us buying things

We can only buy things with money or credit

We get money  from working and more money from either working more or raises.

We get credit from credit cards and merchant cards and home equity loans, but we all have credit limits.

While home values were going up , Americans were borrowing against the equity in their homes to consume products. Naturally companies rose to the occasion to fulfill the demand of the consumption.  Macy’s, Pottery Barn, Gucci, Target, Circuit City, Linens & Things, etc…

The nature of our economy must change drastically from a consumer economy to a producer economy again. We need to produce products that the rest of the world buys, bringing their money here.

Now that we cannot afford to buy their wares anymore, look at who is closing down.  Those employees not only have no credit to buy but no income either. So more companies will have to close. This is a vicious cycle that really may cripple us.

In the past, we built cars that the world wanted. If our economy slumped, we could still rely on other stronger economies to pick us up. We exported planes, and cars, chemicals, clothes, food and medicine. Now, we import most of those things.

When 70% of your economy is based on you buying things rather than making them it is clearly unsustainable. Look at your day today. You can spend all day making money but how much money can you spend today. Personally, if I spent my days spending money, I wouldn’t last a week.

That is the sad state of affairs.

So how do you fix it?

I do know how it won’t get fixed. Giving us all more money to spend won’t fix it. Giving the banks more money to lend won’t fix it.

Creating jobs that produce something will. Changing our economy to be more based on making things and less based on buying them will really fix it.

Basically we have to retool.

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