Americans start acting responsibly, sending country deeper into depression

Your own private Idaho.

When you can no longer afford even a night out in Boise, Idaho, your country's in deep financial trouble.

In a clever immorality tale about 21st century capitalism, the Wall Street Journal tells us this morning that people in the Intermountain West are having to give up meet and potatoes. Like many other families throughout the country, the average-American Capp and Muir families have had to stop spending and start saving.

No more nights out in downtown Boise. The Capps now have to stick close to their suburban home. But — the bad news keeps piling up — they've had to sacrifice cable TV! And they have teenagers in the house! (Memo to the parents: If you can't afford to put meat on the table, at least serve your kids Robot Chicken.)

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Kelly Evans's story, "Hard-Hit Families Finally Start Saving, Aggravating Nation's Economic Woes," fascinates, not only because it's a detailed yet smooth human-interest yarn, but also because it points out the financial perversity spreading through the land because of Wall Street's meltdown.

Don't feel sorry for these hinterland families. The fact that they're desperately trying to save their money, instead of going into more debt, spells doom for the rest of us. By trying to extricate themselves from their own mess, they're just making it worse for all of us...and for themselves. Screwy, huh? Here's the explanation, per Evans's story:

As layoffs and store closures grip Boise, these two local families hope their newfound frugality will see them through the economic downturn. But this same thriftiness, embraced by families across the U.S., is also a major reason the downturn may not soon end. Americans, fresh off a decadeslong buying spree, are finally saving more and spending less — just as the economy needs their dollars the most.

Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation's standard of living. But in a recession, increased saving -- or its flip side, decreased spending -- can exacerbate the economy's woes. It's what economists call the "paradox of thrift."

It's more like a "Cash-22." I mean, you finally start acting responsibly, saving money instead of piling up even more outrageous credit-card debt and purchasing gizmos and gewgaws that relentless advertising has brainwashed you into lusting after, and that's bad for you, your family, and the country? More from Evans:

U.S. household debt, which has been growing steadily since the Federal Reserve began tracking it in 1952, declined for the first time in the third quarter of 2008. In the same quarter, U.S. consumer spending growth declined for the first time in 17 years.

That has resulted in a rise in the personal saving rate, which the government calculates as the difference between earnings and expenditures. In recent years, as Americans spent more than they earned, the personal saving rate dipped below zero. Economists now expect the rate to rebound to 3% to 5%, or even higher, in 2009, among the sharpest reversals since World War II.

The truth is that our economy demands that you continue acting like suckers by trying to live beyond your means. And when you stop being a sucker — like when you're laid off and you don't have a choice because you have to start saving your money to pay your bills and plan for the hard times — then you're blamed for not being a good citizen.

Oh well, Wall Street's worse-than-usual greed may have caused this problem, but we New Yorkers can be part of the solution. Bailouts of Wall Street haven't worked, so why not try to rescue some other downtowns?

Road trip to Boise!

Now that you know that the real goniffs are yourselves instead of people like Bernie Madoff, you're free to click on the following news items...


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