America in Balance - Who Knew?

This lovely Economist video really shows how we were a country in balance...until the 80's.


  1. The ideas/facts come fast and quick, so it takes a couple watches to catch what's going on, but the outcome for me is that we can't really spend, nor tax cut our way out of this. Eventually, if we are to thrive again, we'll need to find that nice middle ground that allows our government to not run deficits while at the same time allows our consumption rate to healthily drop to 65-70%.

    Good luck to us, cause we're going to need that on top of calm/collected leaders to allow us to work our way back to a balanced economy. I can't stress that last portion enough - shit's going to happen; we just need to be strong enough to not let it hit the fan when it does.

  2. I like that they called the unknown future "the Wonder Years"

    I thought the explanation of the future there was interesting - "If the rest of the world were healthy, the US would see a transition from consumption and borrowing to exports and savings."

    Scott I agree with you there... we have talked about how we definitely expect things to hit the fan at least once more. I'm very nervous about what our reaction will be when it does - I'm expecting a "sky is falling" implosion from our leadership as they scream about how all the money we spent didn't do anything, trying to tear each other apart for political gain like rabid chickens with their heads cut off.

    How much of the drop in savings / rise in consumption do you think was the product of individual zeal? And how much of the balancing that needs to happen will be the result of personal decisions to simply save more and take on less debt, in your opinions?

  3. To answer your first question:

    I don't think the mindset of Americans changed all that much from 1950 to 1990; it's just that the wealth we possessed (the majority of which was paper) made us consume more. It's not that we necessarily did an about face and said, "Hey, lets spend more." It's more a result of inflation/interest rates dropping giving us a sense of being wealthier than we really were. Essentially, the Great Bull Market was half bull/half bubble.

  4. I think that there is a possibility, but not a probability, of the shit hitting the fan. Currently, savings is increasing, while consumption is coming down. I think both of these will occur, whether or not the government does something. The government needs to make sure not to increase the deficit, even if that means the stock market takes two years to show growth. Right now, this instant, the government and consumers are taking the slow and steady, positive steps towards balancing spending and saving. My fear is that the government doesn't think the economy is recovering fast enough and will interfere, tipping the precious balance.

  5. Let's just hope Obama doesn't get petrified in a year when we haven't bounced back big enough, and he realizes this is all bigger than him, and lets the market/world correct accordingly in place of trying something stupid to help keep his reelection a possibility.

  6. Scott and Aaron, I agree that the political cycle is the scariest factor here. If this economic recovery isn't on the upward swing of a cycle by 3 years into Obama's term, he is definitely going to try and do something to make himself seem to have impact. It's not an indictment of Obama, it's just how our politics works.

    Already he is framing the current crisis in terms of what the Administration has done "to pull us back from the brink" of economic disaster. Taking credit for any and everything is the MO of politicians.

    That said, it's also going to be the MO of the opposing party to try and ruin progress if it hurts Obama... as this NYT op-ed about the cash for clunkers opposition by Republicans demonstrates