Why is it that when consumers behave responsibly, the economy does poorly?
Careless borrowing and spending eventually leads to an economic crisis. And during an economic crisis people naturally become more prudent and wise in their spending and saving habits. But just because people become more prudent during bad times doesn’t mean that prudence causes the economy to go down. It’s the careless borrowing and spending before the bad times that causes it. Because people build up too much debt that later they cannot easily repay. You have to realize that borrowing money allows people to delay the consequences of their careless spending. That’s why people can waste money and resources for a long time without any bad consequences. But eventually their debts catch up with them. And then they pay the price for their imprudent behavior. P.S. The advantage of more borrowing and more profligate spending is that it will delay the day of reckoning. That’s what all borrowing for consumption purposes does. But this is more of an advantage for politicians who only worry abou
