Stimulus as solution?

That would make sense only in a long-term zero (or negative) inflation rate environment.

It's the fact that the Consumer Price Index has risen steadily since World War II that made it worthwhile to be in debt--you would be paying off that debt with cheaper dollars than the dollars you originally borrowed.

It's not a coincidence that America's infatuation with debt occurred at the same time that the U.S. Government decided that "a little inflation" (which occasionally turned into a lot of inflation) was a small price to pay to stave off another Great Depression.

In the 19th century, prices actually *fell* long-term, as the currency remained stable (tied to the dollar) and improvements in technology made goods cheaper and more widely available. And sure enough, back then, Americans still believed in thrift. Because back then, a penny saved was a penny earned.

In a long-term inflationary environment, a penny saved is half a penny earned. Why bother saving it.

Hear, hear!

I think you are correct that people believed in thrift, but there was a lot of credit in those days. No one paid cash at the store when they bought stuff. People charged everything, then paid for it when the crops came in, rarely with cash. Grocery stores carried people on credit, to say nothing of hardware stores, dress shops, every kind of shop. This was true, not just in the rural part of the US, but in cities as well, *until* World War II when the economy grew and society became more mobile. It was at that time that charge cards came into being so that credit could be more regulated, if not by the "regulators", at least by those doing the lending.

Elizabeth Richardson