Borrowing Less, Saving More: That’s Sustainability

four credit cardsSustainability is still young enough in the minds of Americans for most of us to think of it as only being associated with buying hybrids, using CFLs and recycling our bottles and cans. In reality, sustainability is an encompassing topic that affects every aspect of how we live in a perpetual search for balance. When it comes to sustainability, our economy has a long way to go, but having Americans revert from their incessant spending of money (that we often don’t have) and actually saving so that we can afford things that we want is a step in the right direction.

An article in the Wall Street Journal recently highlighted the fact that credit card borrowing in the U.S. decreased for an 11th month in a row—an unprecedented occurrence since the Federal Reserve Bank began keeping track of the figures in 1943. According to the Fed, borrowing in the fourth quarter decreased at an annual 4.75%. Not only were Americans borrowing less, but saving more to boot. The article reported that savings as a percentage of personal income had risen to 4.6% in 2009 from 2.7% in 2008.

As one of the silver linings sparked by the recession, the borrowing decrease marks a recent reversal from decades of Americans’ tendency to just put it on plastic—a practice that is inherently unsustainable. In perpetuity, spending more than we have will only end in some manner of correction. Of course in retrospect it seems simple to realize that making a dollar and spending two ad infinitum is likely to cause problems sooner or later, but the resulting effects are characteristic of a deeper undercurrent that runs through our society: losing sight of how much of a resource we have and embarking on a binge of spending.

I often hear people claim that sustainability and capitalism are at odds, which simply is not true. Allowing a free market of consumer values to determine value can absolutely be done in a sustainable way. Where the two collide is the American condition of infinite growth. Always bigger, always more, always increasing. This belief makes Americans believe that borrowing twice their income is alright, because in the end everything they own will increase in value to cover the costs. Eventually, America’s economy may have to dictate worth as much closer to “book value,” or what assets are worth in the present.

Unsurprisingly, our troubles with cash parallel our problems with natural resources. Misled into the illusion that there will “always be more” in the future stems our lack of consideration for how we handle our use of land, air, water and the energy they all can produce. Quite simply, we are taking out debt on our environment that we cannot hope to pay back at our current rate of spending.

As a country we were not always this bad. According to the Bureau of Economic Analysis our savings rate peaked in 1982 at 11.2%–over twice what it is today. Keep saving, America. Spend what you have, buy what you need, and just maybe there will be some of the “green stuff” left over. Let us not forget, there is no stimulus revival for the planet’s version of a depression.

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