Plastic Currency

As a person who has experienced non-US capitalism before drenching herself deep into the pits of US commercialism, the most shocking aspect of the US economy is its concept of debt. Although I have heard that things are changing rapidly in South Korea as well, at least based on my personal experience, debt is a mostly negative concept. Unless one is in danger of becoming homeless the very next day, regular consumers do not go apply for debt. If one cannot afford a luxury car, so be it. One will opt for a city-sized Kia, or even better, will just take the subway to anywhere they wish. If someone is driving a Mercedes E-Class sedan in the streets of Seoul, you better believe that the person actually owns that gorgeous machine, while the same car in the US is most likely borrowed from a loaning company.

But freedom of being in debt is what made US capitalism so prolific. Borrowed money allows the market to expand several times as what it really should be. And borrowing money is such a normal concept to US consumers, no one thinks twice about what a huge fairy tale the economy is made up of. A consumer in the US with loads of debt in their bank account, whether it is a vehicle loan, or a mortgage, or credit card debt, is free of the social shame associated with such of a consumer in Korea. And since the US consumer has free access to borrowed money, the consumer has no need to work tireless hours during weekends in order to earn up that weekend country club membership. More free time, more time to spend. More false spending, larger market, building of more capital, more "wealth" for everyone to share. I assume a similar principal applies to industrial banking as well. More access to borrowed money for a corporation, more investment from borrowed capital, larger market.

It seems like a lot of economists attribute this falsely large market to the economic downturn that we are currently experiencing. Since I am not an expert in this field, I will have to assume that what these people are saying is true. The thing is though, even though the experts realize borrowed capital is the reason for the fall, the attitude towards debt of normal citizens has not really changed. People still "buy" houses with only 5% down-payment. People still "buy" luxury sedans with a 5 year loan. In fact, some economists (and mostly banks) continue to encourage this trend, mostly because borrowed debt and falsely large size of market is what made the US so much richer than any other country in the world. Debt is both the weakness and the strength of the uniquely insane US capitalism. Consumers of this huge market refuse to downsize their living standards because the possibility of a giant bubble burst in the near future. This is a country where people living on the streets own cell-phones and complain about the variety of the food given to them through charitable institutions.

I am blabbering about the economy because I am experiencing this phenomena first hand. Two months ago, I decided to cut down my credit card usage. My goal is to eventually cut it down to a few bucks a month. One reason was that the idiot credit card companies decided to give the irresponsible single asian girl living right next to one of the largest malls in the world a credit limit that will surely ruin her life. The other reason was that after making a budget of my expenses for the first time (for those living in the US, try out the financial program mint.com. It is absolutely awesome for lazy but poor people like me), I realized that most of my spending was on credit card debt. That was fine when my credit limit was one that I could afford. Not when it is something that will certainly put me on the streets.

But by cutting my spending to only what I can afford, I am painfully realizing how poor I really am and that MY own economy was made up of false illusions as well. In my own mind, I think I have assumed that the money in my bank account AND my credit limit was money that I owned. Which was why I was able to spend as much as I have the past year. After cutting my credit card usage drastically, my credit card money is no longer money I can spend. It feels to me like my income has just slashed in half.

And here's the beauty of it. My income has NOT slashed in half. It is exactly the same. Yet it FEELS like my income has slashed in half, thus I am cutting my expenses accordingly. Less spending is probably the best economical decision for me as an individual. But if every person in the US follows my suit, the US market would probably slash in half, or even more, depending on how much debt a person owes. Which translates to less wealth translated into the market, slower growth and possibly lower standards of living. This may not be the best outcome for the economy as a whole.

I guess this is why nature leaves economically irresponsible people in the gene pool. And why there seems to be much more of these kinds of people in the US than in Korea. So they can drown themselves in debt in order to sustain the economy, while stingy immigrants live poor only on the money they actually hold in their hands. This is why the US is such a great country. There is a niche for every type of individual in society.