General01 Dec 2008 05:40 pm

The US has long been the center of over consumption. Living beyond one’s means has been a crucial element in the success of modern capitalism. Those living simply or basically buying according to need were a drag on the economic boon of the US. Capitalism needs excess and waste in order to survive and flourish. The following equation may look like word play, but it is more true than one would think at first blush.

Profit = surplus = excess = waste

When people buy only what they need the economy contracts and we have a recession. When it contracts for a length of time we have a depression. The last economic boon lasted some 30 years, much longer than previous growth periods. Yet, the bulk of this growth was gained through debt accumulation and monetary growth, not through wages and industry.

The dominoes have just begun to fall. Mass layoffs are still in their infancy and will have to run their course. House prices still have far to fall to reach the historical mean. Houses have historically cost a person about three years salary, the average salary is under 50,000 a year and the average house is still well over 150,000. Either salaries need to drastically rise or house prices drastically need to fall. Guess which will happen.

Though the credit bubble has popped, it still is above the peak of insanity we reached in 1929. Yes, you read that correctly. What this means is that the amount of debt as compared to a percentage of Gross Domestic Product is still significantly higher than the peak of the roaring twenties.

All previous down markets have lasted three eighths as long as the preceding up phase. This would mean the stock market will be going down till 2016 – 2017. Since stock markets usually rebound before the economy, one can assume the economy will remain weak and contract at least through 2016.

This all leads me to the title of this post. Is this the last Christmas of post WWII over consumption? Or is this a lost Christmas, and last year was the final hurrah?

The media will do its job of being schizophrenic having conflicting stories talking of dismal retail sales while occasionally spouting statistics which depict a surprisingly healthy consumer. Most of these stats and spins will be put out by retailers hoping to convince consumers to go out and spend to avoid the stigma of being the only person not giving every one  top notch presents. Maybe, these misleading stats and stories will work, after all they are experts at advertising and consumptive propaganda.

Already I’ve seen deceptive articles such as one that stated this Thanksgiving weekend was 7.2% higher than the same weekend last year. This article appeared to contradict other articles in the same newspaper which stated that the weekend was less than 3% better than sales of last years Thanksgiving weekend. This apparent conflict is resolved when you realize that the 7.2% rise is comparing Thanksgiving weekend of this year with the week after Thanksgiving of last year. This is because Thanksgiving is relatively late this calendar year.

You can expect to see many deceptive articles and statistics this holiday season. It may help make this the last Christmas as opposed to the lost Christmas. But one thing is for certain this economy has a long contraction in front of it. So if you are not in debt you are becoming wealthier by the day as prices come down and the global money supply goes through a much needed contraction.

Jim Guido

5 Responses to “The Last Christmas?”


  1. […] The Last Christmas […]


  2. […] of post WWII over consumption? Or is this a lost Christmas, and last year was the final hurrah? (GuidoWorld » The Last Christmas?) Tags: consumption, depression, economics, recession Posted under Economy Comments […]

  3. on 24 Feb 2011 at 3:19 pm Freeman Gallosa

    Surprisingly I virtually go along with just about all you’ve said. I reckon that it is great to re-look at the way you think simply because you enter into lots of habits in the head. Appreciate the comments.

  4. on 14 Jan 2012 at 4:12 pm Doretha Stazenski

    Do you mind if I quote a small number of your posts as long as I provide credit and sources returning to your website: http://guidoworld.com/blog/the-last-christmas/. I’ll aslo be certain to give you the proper anchortext link using your website title: GuidoWorld » The Last Christmas?. Please let me know if this is ok with you. Many thanks


  5. […] This all leads me to the title of this post. Is this the last Christmas of post WWII over consumption? Or is this a lost Christmas, and last year was the final hurrah? (GuidoWorld » The Last Christmas?) […]

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