Earn What You Spend

[via Alex Tabarrok] The Curious Capitalist Justin Fox was on CNBC recently, with a simple message:

We can’t continue to spend more than we earn. 

One of the anchors was shocked at this proclamation, and produced what I think is the greatest quote I’ve heard in a long time: “we can’t have the sort of booming economy we’ve had if consumers only spend what they earn!”  

Perhaps he’s right.  But a quick look at our GDP growth, the unemployment numbers, and the stock market shows that ‘booming’ economy he referenced to be nothing more than a mirage.