The guy tried to convince me that buying/selling power is the only thing necessary for a strong economy. He argued that the United States has the strongest economy because... they buy more things on credit.
And I tried to explain to him that buying things on credit, without a manufacturing base to support it, would eventually cause a financial collapse.
To me this is a no-brainer. If you don't have manufacturing, a housing sector, farming, mining and lumber industries... well then eventually the economy will run out of steam because the country is only importing goods and selling them to each other and not making any of their own. (In theory tourism would help, but unless you're a country like Jamaica that gets tourists all year long its not going to do much.)
But try as I might I couldn't get it through his arrogant thick skull that it is blue collar factory workers/farmers/etc that make up the foundation of a strong economy.
To his mind Americans are rich, will always be rich, and that money seems to just grow on trees in the United States.
Oh and by the way, the U.S. National Debt recently surpassed $21 trillion USD.
Buying things on credit is one of the things that caused the Great Depression in 1929.
People were getting loans from banks and using the loaned money to buy stocks. As long as stocks kept going up, everything was good. But if stocks fell sharply, both the person borrowing the money and the bank lost money.
This is why bankers during the big crash in 1929 were jumping out windows and killing themselves. They had lost everything.
Buying Houses on credit is what led to the Great Recession of 2007 to 2010.
The housing crisis was caused by banks giving sub-prime mortgages to people who couldn't afford them in the long run when the economy ran into a hiccup. That hiccup turned into avalanche that caused the U.S. housing market to collapse, resulting in banks foreclosing on millions of Americans while the banks themselves were asking for bailout money from the Bush Administration and later the Obama Administration.
Ergo, more debt is not good for the economy.
Want to see a stable economy that is rapidly growing? Look no further than China. Fifty years from now China will be one of the wealthiest countries on the planet, as they have a huge manufacturing base, a growing middle class, and an economy that grows approx. 8% every year.
Meanwhile the USA has a shrinking manufacturing industry, a shrinking middle class as poverty grows, and the economy averages less than 1% growth, with the economy shrinking during recessions.
What the USA needs:
- More manufacturing jobs.
- More people joining the middle class and getting out of poverty.
- More real money, less credit/debt.
And apparently the USA also needs more people who understand the fundamentals of economics, because if just 1 American thinks that more debt is a good thing, guaranteed there are lots more people out there like him who just don't understand that more debt is not the solution to America's financial woes.