The market’s obviously suffering these last few days, what with the obvious failure of the TARP and the stillbirth of the stimulus package. The stock market is clearly feeling the loss, and is on an unpleasant downward trajectory.
But the stock market is not the economy as a whole. There are a lot of reasons why I remain optimistic about the overall health of the US.
1. If you want to borrow money, you’re in a buyers market.
2. If you want to buy a home, you’re in a buyer’s market
3. The ubiquity of the Internet has dramatically reduced transaction costs – Craigslist, eBay, Freecycle, PaperbackSwap – all represent ways to trade that were simply not available at any time in the past. These have a significant salutary effect on the ability of people to find what they want or need, at a price they are willing to pay.
4. The ubiquity of job-searching systems – the cost of posting jobs is so low, and the ability to find jobs is so high, that people aren’t going to waste nearly as much time standing in line waiting/hoping for jobs to appear. There are so many jobs out there that good, talented people should not have a hard time finding work, especially if their skills are relevant for a 21st century economy.
5. The ubiquity of online education – unlike any time in the past, it is possible to fairly quickly assemble a working knowledge of a subject area from experts, regardless of where they, or you, are. This has a salutary effect on our people’s skills, which will help them gear up for the 21st century economy.
6. Lastly, the ubiquity of the Internet makes it easier to find ways to save money relatively painlessly – carpooling, finding roommates, reducing grocery budgets, reducing car trips (more online ordering and coordination). With so many things offered freely on the Internet, a decent chunk of ones formerly variable-cost budget (entertainment, traveling costs, knowledge acquisition, etc) can be replaced by a single fixed monthly fee (your high speed Internet connection).
P.S. There is no paradox of thrift. It’s utterly ridiculous, because it assumes that there is no technological or process innovations to reduce waste. More on this later.