Maxed out 

Ahead of the curve


I'm mad as hell and... and... and there's not a damn thing I can do about it. Except take the blame people keep saying is mine, even if I don't agree with them.

For the 310 th time since late November, someone's come up to me and said words to the effect, "I voted for Ken and I'm sorry I did. You shouldn't have endorsed him." I don't think all, or maybe even any of those people voted the way they did because of anything written in Pique , but I understand the sentiment behind their feeble attempts to blame me. Hey, I'm disappointed too. But if I had to do it over again.... Maybe that's one of those sentences I'm uncertain how to end.

But being the kind of positive, upbeat guy I am, let's look on the bright side. Who knew Ken and Bill were such insightful economists? Long before Nobel prize-winning economist and New York Times columnist Paul Krugman started writing about the paradox of thrift, Ken and Bill were way ahead of the curve in doing everything they could to negate its dreaded, recessionary effects.

Don't keep up with economic recession theory? Let me summarize. Hypothetically - since everything economists seem to do takes place in a hypothetical universe - when economies head south, when investments lose value, when people live in fear of losing their jobs, when businesses vanish like farts in the wind, the natural response is for people to become more thrifty. They find ways to spend less and save more.

While thrift has always been a virtue - penny saved and all that - it, like so many other virtues, has been one North Americans have mostly practiced in the same hypothetical universe economists live in. The American, and to a slightly lesser extent Canadian, model has been more aptly described as Live for Today or Some Debt Good - More Debt Better. Ironically, I write about that from something of a hypothetical perspective since the working title of the book I'm writing is Confessions of a Cheapskate .

But it turns out that thrift, at least in times like these, isn't a virtue at all. The paradox of thrift operates on both a macro and microeconomic level. When everyone tries to increase savings at the same time, concomitantly decreasing spending, the effect is a depressed economy. If consumers cut their spending, and nothing appears to replace that spending, the economy descends into recession, businesses lay more people off, everyone's income is reduced, a feedback cycle is created. On a micro level, individual incomes may actually fall more than the amounts saved. Talk about your vicious circles.


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