I’m surprised Billy still hasn’t responded to a thread that was made for him.
It doesn’t create a buffer zone, it just postpones the correction, encourages more malinvestment, and makes the eventual correction much more painful.
Well, it’s a crush zone. The cash that supports surplus consumption is squeezed back into core elements of productivity when recessions occur, temporarily insulating them from losses. It provides a state of pseudo-liquidity to the economy, flexibility.
Capitalism is perpetually in need of staving off the inevitable market corrections (human suffering) that it creates. There’s no new wisdom in this. They may be effective measures for thinning the herd; is that a worthy goal?
Capitalism does have many corrections within it, that’s what creates the efficiency in capitalism that no other economic system can provide, but to equate that as being human suffering is incorrect. Unless government is involved through regulations and the manipulation of money and credit, there is no system-wide market correction that would happen. So with true capitalism, the correction would simply be a business failing resulting in resources being reallocated to more productive uses. Those who lost a job would either find a new one or work on gaining skills to get a new one. Savings would act as a buffer to prevent any suffering. In today’s society, where savings is discouraged by the manipulation of money and by heavy taxation, you will get the suffering you mention.
Yes, thinning the herd is letting productive use of resources continue and letting unproductive use of resources get allocated elsewhere. This is what creates the most prosperity for all.
I believe many people do it for the sport and bragging rights. They can tell all their friends about the great deal they got on a television. It’s the thrill of the hunt for the best buy.
I have known people who would get up early to stand in line at 5am in the bitter cold for shopping just because it was “exciting”.