Thursday, December 11, 2008

Thoughts on the economic panic

So, I know the technical definition of what's a recession versus a depression, but I'm starting to get a glimpse of what may be a more usable definition to those of us actually living it. A recession seems to be characterized with the economy contracting and inflation going crazy, while a depression would be the same, but with deflation taking the spotlight. I know economists might disagree with me, but I'm reading all this panicky stuff about how inflation would be bad, but the deflation we're seeing is really bad, cause it'll stretch this recession out much futher. And I'm thinking, so its the deflation that is putting us in danger of a depression then?

Anyway, reading all this stuff has got me even more inspired to do MIY days. I've been googling "Make Your Own XYZ" all over the place. I am now excited to make my own laundry detergent (when we run out), yogurt, ricotta and soft farm cheese, pizza dough, bread, bath salts, shampoo, and who knows what else. :)

I know we'll be saving money with prices deflating, but I also know how bad that is long term for the economy, and want to save as much as I can now, while I can, just in case. It'll also help us pay off our debt anyway, so saving is good.

Actually, I also just have to put this out there: Thank God this is happening. I know its really painful right now, and scary, but check it out. People are actually being responsible with their money! The amount of credit applications and credit purchases has dropped dramatically. Luxury items that people can't afford are not being bought. Even with the holiday season here! Its like our country is finally waking up! Its a great silver lining to this cloud, and I hope people's lifestyles actually change long term, instead of just while things are tight. Its very inspiring, seeing people learn to live sustainably on the money they make, rather than always spending more.

A little statistic to show you what I mean: in 2007 it was estimated that consumers in the US spent $2-$3 TRILLION more than they made. (its just an estimate, and clearly has a wide margin of error, but STILL!) There's no estimate for 2008, but I bet its gonna be way lower. :)

2 comments:

Anonymous said...

Hi Katy! I'm a friend of Paige's (although she'll always be Steph to me), and she suggested I come take a look at your blog. I've got to say, although it's probably not a popular view, I completely agree with you here. It really does seem to me like we American's were completely out of our heads with comsumerism (sadly, too many still are), and that this recession/depression (I prefer the term correction), is just what we need.

Plus it's a good excuse for me to learn how to do a lot of things myself, without looking any more odd to my friends than I am sure I already do. ;)

Unknown said...

Welcome Sarah!

Yeah, I tend to take a contrarian veiw on economic issues, which isn't too popular, but in this type of climate, seems to be the safer bet.