Theoretically, one day mankind could run out of ways to grow the total amount of wealth in the universe, at which point, it would cease making sense to borrow money at interest. As that happens, debt payments will exceed loans and the economy will deflate to whatever quantity of money existed when we left the gold standard. From a monetary standpoint, this isn’t really a bad thing. From a human perspective, it will mean that we’ve gotten technology to the highest it will ever go - but that may happen well into the band of awesome.
Yeah, well…
Out of interest, what is the method you heard about?
Purchasing brand new luxury sport utility vehicles and then taking them into a swamp or using them to ford a river.
I don’t get what you’re saying. Are they ruining them and abandoning them after one drive? Otherwise, how is buying an SUV wasting money? None of the search terms I used for more info got me any indication that this is happening either.
As Exapno Mapcase said, this isn’t equivalent to burning the money unless they’re destroying the vehicles in the process and not having them repaired, and even then it isn’t a perfect analogy.
Burning money is taking it out of the economy; buying frivolities is putting it into the economy; buying wasteful frivolities, as per the broken window fallacy, is putting money into the economy in a way that’s harmful in other ways. To determine which category this fits into would require a more detailed analysis, to figure out what opportunity costs the investment in riverine SUVs has associated with it.
This, in particular as you’re apparently saying that charity events somehow take money out of the economy, makes no sense. Can you explain?
yes well thats probably a joke to mention that “burning cash causes deflation”.
Well to explain the joke, of course it will not. The problem with spending causes recession, depression, and it soon causes inflation… nearly no one puts prices down that much…There might be token efforts from government but business won’t , the bank won’t let them, t doesn’t pay the loan, the staff are on contracts, awards, ( fixed rate of pay one way or another),etc
I wasn’t talking about charity.
Governments spend enormous sums of money on things like weapons, which are then destroyed during their use. Once they are built, they do nothing to help the economy.
Wars are also extremely wasteful. The US has spent something like 2 trillion dollars fighting wars over the past decade or so, and has gotten bupkis in return economically.
Ignoring all your claims about warfare and the economy, how does any of that tie back into the custom of potlatch, which you also mentioned?
A feature of many potlatches was the wholesale destruction of possessions:
beowulff: Oh, interesting. I always hear about potlatches in terms of a gift economy, so I guess I never studied them deeply enough to find out about the property destruction part of it. That’s definitely an example of what I was talking about with regards to opportunity costs and broken windows: Everything invested in what gets destroyed at a potlatch is something not invested in a durable good.
But if I buy manufactured goods and then destroy them in a non environmentally damaging way; surely I am doing nothing but good?
An SUV with the offroad packages is about double the price of a comparable sedan that can do the same job. (most people use their SUVs to drive to work 99% of the time)
It consumes roughly double the fuel to drive the same distance.
So essentially it’s a big pile of money you’ve just committed to. Now if you go drive that thing into a river, you’re realistically doing thousands of dollars worth of damage when water gets into the differential and transmission and floods muddy water around the electrical wiring. Even if the vehicle doesn’t get stuck, you’re seriously messing up a brand new car. It’s not going to smell right afterwards, either.
And the offroad tires and things you need for this purpose make the fuel efficiency loss even worse.
There are purpose built offroad vehicles that look like a metal framework and an exposed engine. Or you could purchase an old vehicle from a junkyard to mess up instead. A smart person would do this, and use a fuel efficient car for their highway commute to work.
Those SUVs are status symbols. In certain areas of the country, they say “I make enough money I can waste some on this big pile of rusting metal in my driveway.”
The folks really trying to hang their masculinity out there will take the vehicle offroad (maybe in a ditch behind the local day care or something) to get mud on it. They will then drive it around unwashed.
It’s peacocking.
Could you give some cites to show that this exists? I’m curious about it, but as I say I can find no record of it.
For the larger issue, read some Thorstein Veblen on the theory of Conspicuous Consumption. The term is over 100 years old; the practice is timeless.
Would a photograph of the vehicles in the drivewave on my street suffice? Or do you want statistics on truck sales in Texas? Or maybe a photograph of the highway to work, where approximately 50% of the cars are trucks or SUVs performing the heavy task of moving a single overweight person to work.
Good grief. I have no doubt that most SUVs are not used for necessary off-road travel. People have been noticing that and saying that since the first one appeared. I’m doubting the fact that people ruin them and leave them to rot after one outing. Your statements say that they are indeed continuing to use the SUV and that means their value as an example of burning money is totally valueless.
In fact, using them as people really do is the opposite of deflationary. It is clearly inflationary. If they are keeping their SUVs for use, then they are running up higher than normal repair and maintenance bills, giving them a higher multiplier effect. If they are ruining them after one use, and then going out and buying another to ruin repeatedly, then they are putting more money into use in the economy than us ordinary mortals who keep a car for years and spend ordinary money on it.
You may not like the practice, but it has no equivalency to burning money.
Broken window fallacy :
Town A : a punk breaks lots of windows. The rate of glass replacement in town is double the natural rate of replacement.
Town B : punk is punished and quits breaking windows. Only “natural” breakage happens.
Clearly, Town B is making better use of it’s resources, and there is now greater economic activity available for productive pursuits.
SUV fallacy :
State A : SUVs become prevalent, and in order to compete for status/mates, everyone has to purchase one. Also, there’s the simple fact that if most highway drivers are in land tanks, you need a land tank of your own in order to not get squashed. The state as a whole spends double the money on purchasing vehicles (since SUVs are approximately twice as expensive) and double the money on gasoline (since they have about half the fuel efficiency).
State B : everyone drives sedans and Smart cars. The state as a whole spends half the money on vehicles (and has about half the air pollution)
In the broken window fallacy, the purpose of a window is to provide environmental protection that allows light through. If the windows are being constantly broken, this means unnecessary economic activity that could go to more productive things is redirected to replacing windows.
In the SUV variant, the purpose of a car is to provide personal semi-rapid transportation to a destination. If (for status and personal safety reasons) people have to purchase land tanks instead of a vehicle optimized for the task, again, resources are being wasted.
Blather. If all you’re going for is efficiency, ban cars and require public transportation, bicycles, and walking.
That scenario is actually deflationary, the opposite of your point. Where would the money come from to provide “greater economic activity available for productive pursuits” when you take away more from the economy than was lost in the Great Deflation? And who gets to decide what “productive” means? You? Not likely.