Giving Americans a Debt Break: Passing on the World’s Consumer Mantle

Through our consumption, Americans have sequentially built the US, European, Japanese, Korean, and now other Asian economies. Our transfer of massive wealth through consumption has been mutually beneficial. Yet, Americans have financed their consumption in the last two decades with credit, i.e., debt. Consumption through debt accumulation is no longer sustainable for Americans; therefore, it is time to pass the mantle of world’s consumer to others.

American’s standard of living has been based on consumption. This consumption has led to competition, innovation and the expansion and creation of new products and markets. Many innovations from basic science discoveries would not have been developed into consumer products without underlying American consumption. Thus, the world is a much better place because of American’s voracious consumption.

As long as this consumption was based on using increasing wealth, the consumption and growth were hand-in-hand. However, in the last two decades American consumption has been based not on using increasing wealth but instead on using debt, esp. credit card debt. The lending industries for their benefit have used all sorts of measures to increase consumption through increasing debt. The most recent has been the cashing-in of home equity. This debt (credit card, mortgage, etc.) is no longer sustainable. Americans need to consume less and produce more to pay down their debts. We need to get back into balance and this requires giving up on being the world’s consumers.

It already looks like China and India, the worlds two largest populations, are on the brink of becoming voracious consumers. They like Americans must consume their national production to build up their economies as Americans did after World War II. Once the get their national economies sustained, they must also consume American products to give back some wealth for our debt repayment.

The falling American dollar benefits Americans in debt repayment. We are able to sell abroad for less and what we have to pay back is less. It also discourages further consumption from abroad since imports are more expensive. Nevertheless, the dollar cannot fall continually without a negative impact nationally and internationally. We need to decrease our borrowing to improve the dollar.

In summary, American’s debt is no longer sustainable; therefore, other nations need to take up the mantle of the world’s consumers if the global economy. It is time for debt relief for Americans.

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