(Posting this mainly for myself. Writing out loud.)This is not a revelation by any stretch of the imagination... But for me it was a light bulb moment. Been thinking today on the ways that the cultural approach to credit in American society has distorted the optimization principle and in turn perverted the equilibrium principle. In theory, people try to choose the best patterns of consumption that they can afford (afford being the key word here). Credit exaggerates our sense of what we can afford. We spend more than we actually can afford. We make purchases with money we dont really have and then pay oftentimes exorbitant amounts of interest with money we have not yet earned. No wonder prices in the current market system have become so inflated. Through our own greed and have-it-now-at-any-cost behavior we communicate a demand that we can not truly sustain in the long run. In the end we exhaust our credit limits, we drain our financial reserves and real earning capacity trying to pay the interest, and prices reach ridiculous highs based on our deceptive income (we spent based on credit limits rather than what we could truly afford). From that perspective the problem is neither the market nor the suppliers. Both simply reacted to our own personal lack of patience and self-control o.O
Posted on: Sat, 07 Jun 2014 19:16:44 +0000
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