The United States is currently a 70+% consumption economy.  Meaning for every $10 of economic activity?  $7+ dollars of it is someone buying something.

Of course, every economy is to some degree predicated upon consumption.  But 70+% is dangerously stupid – and unsustainable.  And it has led US to decades of terrible government policy – which has made matters inexorably worse.

Think about it logically for but a moment.  A country that makes almost nothing – and buys almost everything?  Is perpetually teetering on the edge of disaster.

The instant consumer spending slows even a little – the economy slows a LOT.

And the economy never grows very rapidly either.  Because to do so it would take a vast majority of the population all simultaneously getting income increases – and then all of them instantaneously spending most or all of that money.  Which, of course, almost never happens. (more…)