Frugality, an almost archaic sort of word, seems to be in fashion again, judging from the headlines lately. Government, big business, and the average citizen all seem to be taking a new look at this old means of debt management and fiscal control.

Historically, Americans were a frugal, thrifty people. However, with the changes in manufacturing made possible by the Industrial Revolution and a shift towards a consumption-based economy, those concepts fell by the wayside, something that has been particularly noticeable during the past few decades, when credit became king.

Today, it seems, the whole world is in debt. Government and business struggle with enormous deficits and debts, while the average person staggers under record-breaking burdens of personal debt. No wonder so many are taking another look at such old-school values as frugality and thrift.

Thrift and Frugality Making Headlines All Over

From coast to coast, the headlines are full of the new trend in back-to-school clothes shopping – thrift store shopping. National news organizations are holding contests for the best frugal tips and starting thrifty budget makeover program segments. While in recent memory, coupon queens and other frugalists were often gently and not so gently mocked, today it seems that nobody is laughing anymore.

In fact, according to a recent article in the International Herald Tribune, “a long period of frugality” is exactly what the American economy needs. Many think that without change, the turbulence and trouble in the US economy may bring down the economy of the entire world. The root cause of this trouble and turbulence? Debt. Massive, record-breaking debt, on the part of the individual and on the part of business and government.

Frugality As A Means Of Recovery

One of the important points made by the International Herald Tribune piece was the percentage of income that is devoted to servicing debts, a percentage that has reached dizzying heights and is consuming a significant proportion of available income. According to the article, “Americans are spending 14.1 percent of their disposable income on debt servicing, near an all-time high.”

To bring that percentage down to 10 percent would require the elimination of about “$350 billion of debt service. About $2 trillion of household debt has to be totally eradicated.” The means to doing so, as stated by the International Herald Tribune report, assuming that those debts are not simply defaulted, is a shift to frugality, to reducing spending and increasing saving, as well as selling assets if need be.

It’s A Long-Term Sort Of Philosophy

Many economists in America have long feared frugality. With about 70 percent of the economy relying on consumer spending, some fear that if Americans suddenly revert back to thrift and frugality — cutting down on spending, reducing debt, and significantly decreasing the amount of new debt taken on — it would result in serious damage to the economy. There may be some truth to that, however the truth of that fear lies only in the short-term.

One need only look around, take heed of the current headlines, and take note of the imploding of some of the most venerable banking and investing institutions in the nation – collapsing under the weight of their debt – to see where the ruling monetary philosophies of the day take both big business and the individual consumer. We cannot spend ourselves into prosperity, especially not in terms of spending on consumer goods and services, rather than on more productive expenditures.

Frugality and thrift are nothing to fear. While the re-establishing of these values in the economic system may contribute to some short term pain, at this point it will be a mere drop in the bucket when compared to the financial pain caused by the record-setting debt burdens currently held by individuals, businesses, lenders, and government alike. In the long-term, however, returning to those old-school values will result in a stronger economy and a stronger nation.

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