The other day I was watching CNN. (I need to stop doing that. It tends to make me stabby.) On this particular day, a pundit declared that people who aren’t currently suffering as a result of the economic decline have a moral obligation to spend their money to help save the economy. I must have blacked out at that point, because I don’t remember what was said next.

You can probably guess my answer to the question: Do we have a moral obligation to spend? NO!

I didn’t get us into this mess, and it’s not my responsibility to get us out of it. I didn’t get a mortgage I can’t afford. I didn’t buy multiple cars I didn’t need. I didn’t let mounds of credit card pile up without panicking. I didn’t console myself with shopping. I didn’t fill my house with useless crap because it was on sale.

I am a frugal person and a wise spender. Why should I throw all that at risk because our government and our financial industry forgot that whole notion of saving? Or because they decided that shopping is the American way.

It wasn’t my obligation to shop after 9/11, and it isn’t now.

Who Is Obligated to Spend?
The economy can’t continue to be fueled by rampant consumer spending, but some organizations do need to spend. So who are they?

The banks who took bailout money
You can’t accept billions of dollars of financial stimulus and then sit on it or pay it out as bonuses. That money was intended to be loaned to qualified borrowers like stable businesses, home buyers, and car buyers. So start lending – that’s your job.

State and city governments
I’m not saying that state and city governments can’t have savings. They can and should so that economic dips can be weathered, but they also can’t just stop paying teachers and halt transportation projects. Again, the banks need to be making loans to states and cities so they can continue to fund their workforce, who will in turn contribute to the tax pool, which will keep the economy going.

The Federal government
Again, not permanently. As I said yesterday, we need to pay down our debt, but the government also needs to fund real stimulus projects that will put money into worker’s pockets. Not tax breaks, not bank bailouts, but jobs. Then once the economy is rolling again, Congress needs to cut wasteful spending and stop rampant borrowing so we can get out of debt as a nation.

Consumers certainly contributed to our financial disaster by taking out too much credit, buying homes they couldn’t afford, and living beyond their means. However, this is a national problem, not just an individual problem. They couldn’t have bought those homes if the government had effectively regulated mortgages. They couldn’t have taken out so much credit if the banks had abided by basic credit standards. They couldn’t have lived beyond their means if the first two practices hadn’t been permitted.

I don’t believe in trickle-down economics, but in this case, the situation won’t get better for the consumers until the issues at the top are resolved. That has to happen in the banks and the government, not with already tapped consumers.

What do you think? Do we have an obligation to spend? If not us, then who?


4 Responses to “That Makes Me Stabby: Do We Have an Obligation to Spend?”

  1. Carnival of Personal Finance No. 188: The Jane Austen Edition | Pecuniarities on January 19th, 2009 7:00 am

    [...] Sound Money Matters presents That Makes Me Stabby: Do We Have an Obligation to Spend? [...]

  2. Funny about Money on January 19th, 2009 7:42 am

    Thank you! You are soooo right! IMHO, to have everyone run up some credit-card debt is not the solution. The solution came and went decades ago: to teach the citizens sound financial management habits. If everyone lived within their means, no one would have run up insane debts, housing would not have inflated because no one would have paid insane prices, and most people would be free of debt and empowered with enough cash to buy whatever they want, whenever they want.

    Unfortunately, in some states the lunatics are still in charge of the asylums. Here in Arizona, they’re about to gut the three state universities (at mine, that’s after 700 people have already been laid off, two schools have been dismantled, and the university president is begging people to unplug their microwaves when they’re not in use, to save the power that runs their little clocks).

    Believe me, only one group will pay for the fiasco brought on by the misguided theories and corruption of our late, great leaders: people like you and me who still have a few shekels to our names. We soon will be disburdened of those things!

  3. Patricia Tucker on January 19th, 2009 6:12 pm

    Halleluja. You have hit the nail on the head. I have been feeling overwhelmed at trying to fend off this kind of message. There is an “advertisement” on a local radio station (I live in New Mexico) telling us it is our duty to spend money to help the New Mexico economy. It is our responsibility to help and to do that we need to spend.

    As you said, I don’t have credit card debt. I own my home. And we aren’t hungry. However, just as we were getting ready to retire, the stock market tanks. We are living very frugally right now – within our means. Everything is on credit now. However, with no health or dental insurance, I just got news of necessary dental work for $3500. That should help the economy!

  4. Wyrdbeard on January 21st, 2009 8:13 am

    It needed saying, and kudos for saying it. The answer to our financial woes is *not* to pour more gasoline on the fire.

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