Are frugal people ruining the economy?

People who watch their spending are taking heat in some quarters for helping to wreck the economy.

The argument goes like this: Our refusal to buy every little thing we want or eat out for every meal is causing a tidal wave throughout the business world, hurting retailers, suppliers and manufacturers, who are then forced to lay people off.

"Vh" at Funny about Money summarizes the theory this way in a post called "Is frugality un-American?":

So it is that seedy characters like you and me, eccentrics who subscribe to the wacky theory that we should spend no more than we earn, refrain from buying every piece of junk set under our noses, and maybe even put some of what we earn into savings, are responsible for bringing this country to the brink of depression.

We're not making this up. For instance, The Shark Investor addresses PF bloggers in a post called "How your saving advice caused the financial crisis." It's a stretch -- his subject, "Joe," decides to live in a van because PF bloggers said mortgages are "bad." Actually, we hope this is satire.

• Bing: Is the recession over?
  

We concur with vh's thinking -- that if people understood how to manage their finances and live within their means, the following wouldn't have happened:

• People wouldn't be drowning in credit card debt they can't afford to pay.

• They wouldn't have gotten unwise mortgages to pay for vastly overpriced homes (and we all know the rest of that story).

• They would be consuming at a sustainable pace.

"Nope," vh says. "We ants are not responsible for the collapse of the economy, nor are we the ones who are digging its grave. The grasshoppers did it. The grasshoppers and all the greedy little critters who got rich off them."

Published Nov. 19, 2008