Addison Wiggin

“Commerce and religion and patriotism are all part of what we have come to know as the holidays,” opines Leigh Eric Schmidt, a humanities professor at Washington University in St. Louis.

“Consumption during the holiday season has come to have a kind of patriotic quality in the United States,” he tells The New York Times.

And it didn’t start with George W. Bush — who, as it turns out, never did tell Americans after Sept. 11 and in the midst of the 2001 recession to “go shopping.” What he did say in December 2006, as it was obvious to everyone the housing market was rolling over, was this:

“As we work with Congress in the coming year to chart a new course in Iraq and strengthen our military to meet the challenges of the 21st century, we must also work together to achieve important goals for the American people here at home. This work begins with keeping our economy growing. …and I encourage you all to go shopping more.”

“Party on!” we ad post-epochally.

As with many unintended phenomena in America, the idea that we can consume our way to wealth rooted itself firmly during the administration of the 32nd president of the United States, Franklin Delano Roosevelt.

“FDR,” says Harvard historian Lizabeth Cohen, “and many who advised him, felt that the best route out of the Depression was putting money in consumers’ pockets so they could, in a sense, buy us out of the Great Depression.”

In 1939, he went so far as to move up Thanksgiving that year by one week — from Nov. 30 to Nov. 23 — thus extending what’s come to be known as the “holiday shopping season.”

Eighteen months later, he acknowledged the scheme failed. “The experiment had not worked,” The New York Times reported in May 1941. People bought no more in 1939 than in 1938, extra shopping days notwithstanding.

The myth that consumers can spend their way out of a recession goes along with a half-truth repeated every time the media reports retail sales figures.

“Consumer spending drives nearly 70% of economic activity,” said a CBS News report when the numbers came out last Friday.

Well yes… if you consider the formula for GDP to be a valid measure of “economic activity.” Which, for various nefarious reasons we explored yesterday, it’s not.

But far be it from us to bust economic myths this holiday season. Our friend John Papola makes the point far more entertaining… and helps puts today’s 5 in the holiday mood:

Program note: We’ve recently teamed up with John and his crew at Emergent Order for several video projects. Among them is our documentary project Risk!. They’re going to help us take Risk! over the finish line. We plan to begin airing episodes of the new film early in 2013… stay tuned!

Cheers,
Addison Wiggin

The preceding article was excerpted from Agora Finacial’s 5 Min. Forecast. To read the entire episode, please feel free to do so here.

Addison Wiggin

Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.

Recent Articles

Why the Fed Will Launch Another Round of QE

Richard Duncan

Ben Bernanke introduced the world to the concept of "quantitative easing" back in 2002. It was an "unorthodox plan" to save the economy from the horrors of deflation. But the monstrous economy it has actually created is in some ways far worse. And as Richard Duncan explains, it's not going to end any time soon. Read on..


How to Safeguard Your Digital Currency

Dominic Frisby

While the technical details of Bitcoin may intimidate the novice, they shouldn’t keep him from getting in on a digital currency revolution that -- while taking different forms -- isn’t going away. How do you get the simplest, easiest-to-act-on tips about how to invest, safeguard and grow your digital wealth? Dominic Frisby has more…


Solar to Save the World, Ebola to Maim it

Chris Campbell

The duality is stark. In one hand, we have an energy renaissance underway, in the other, a virus is threatening to wreak havoc on the markets and, potentially, your life. Nothing we’re currently doing to fight the Ebola virus will work in 2014, say the researchers. Nothing we’re currently doing will beat it in 2015, either. We need a new game-plan. Read on…


How to Profit From the “Cycle of Hype”

Greg Guenthner

Lose your shirt in 3D printing stocks this year? Don’t kick yourself. You’re not alone. (Okay, kick yourself a little if it’ll make you feel better.) You need to make sure you don’t lose your 3D-printed shirt in the next tech craze. Because there will be a next time. Look, it’s really not your fault if you got taken for a ride on 3D stocks. Greg Guenthner has more...