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The Installment Plan:
How It Has Taken America To Where It Is Today

By The Anonymous American

“It takes two to tango” as the old saying goes. Indeed, American consumers would not have been able to ascend to the lofty heights of the cliff off which they fell without the benevolent assistance of dishonest central bankers and corrupt politicians. They became entwined in a symbiotic dance of greed, envy, sloth, pride, gluttony, and lust. The bankers and politicians provided the consumer with the aphrodisiac that only they could manufacture and together they danced in an unbridled orgy of money and credit. That is, until the music stopped and it was time to pay the piper. 

Post- World War I America ushered in rapid changes to the industrial base and urbanisation of the middle class. Mass production of commodities became commonplace, and the abhorrence of debt was replaced by the need to have things at least as good and as much as your neighbor had, all packaged in an advertising blitz of both product and a convenient way to afford it. The American Dream was discovered and coined in a rising tide of consumption. Debt, once the pronounced stigma of enslavement, was sanitised by a man with pipe in mouth, arms crossed, admiring his newly washed Ford, and his wife piling laundry into her new washer, obviously sanguine at the welcomed relief of one more obligation to drudgery.

Prudence, step aside, The Installment Plan has arrived.

This symbiotic relationship had a magical quality to it, especially at a time when not many people owned very much of anything - anything really neat, that is. The product was married to the installment plan, and they had children - lots of children. The fury of consumption set in place a frenzy of research and development and the expansion of credit as it had never been seen before, only to be surpassed by the Post-War Era of the following war when the ephemeral quality of life produced a sense of urgency to produce, consume and reproduce oneself at an unprecedented rate.

The result was parabolic: with your new house and attached two-car garage, you needed - two cars. What about furniture? Clothes for the family? Why not make them yourself, Singer proclaimed. The lawn needs mowing, “purr purr”... And why push when you can ride? We can look around us today and delineate the countless manufactured progeny of industrialized America, unparalleled in the history of mankind, with milestones each decade that took us to places unimagined.

One must also consider the viability of markets for costly goods that otherwise could never have enjoyed a measure of growth relative to the markets for staples of convenience and perceived necessity. The sewing machine business, pianos, an Encyclopedia Britannica - give the kids an edge, no less. Even swimming pools and vacations fell to lure of the installment plan.

At first blush, when one begins to appraise the value of early purchase rather than later or never, it seems a blessing beyond qualification. But I wonder how many readers cringed just a bit when I mentioned swimming pools? Yes, the bug had bitten and there was no end to the blessing, or was the concept folly? The enterprise of Credit became as big, or bigger, and definitely more profitable than the products that fulfilled the American Dream.

By the era of television, viewers routinely endured a plethora of ads with jingles highlighting the acceptance of debt - "At Beneficial, We're Here For You." Soon, Americans were consolidating debt with more expensive debt so they could hold on to what they had purchased to satisfy that need to "keep up with the Joneses" in every respect. It didn't take long for Barbie and Ken to realise that "...fairy tales can come true, it can happen to you..." if mom and dad are willing.

In The Beginning people bartered for goods and services. I don't need to illustrate that exchange - it was however you wanted it to be. But what if you couldn't agree on what was being advanced for exchange or you didn't want what the other person had. Money solved the problem, and it could take the form of whatever society used as a staple item in quantities sufficient to satisfy a pre-determined measure of value. It could be salt, tea, tobacco or seeds. In cloistered communities and easily traveled regions, this could work adequately, but on a larger scale, logistical problems of freshness, perishable considerations, and quantities arose to make this difficult to maintain consistent value.


Gold and silver were nice. Precious metals made into coins became popular in Western Civilisation by 700 BC when the Lydians first used them for local trade. Since coins could be assigned certain and stable values, people readily accepted them. However, as populations grew, it became inconvenient to trade and to store large quantities. People wanted and needed Representative Money. This meant that what money itself was made of no longer had to be very valuable; it was backed by a government’s or bank's promise to exchange it for a certain amount of silver or gold for the denominated currency. For example, the old Pound Sterling was once guaranteed to be redeemable for a pound of sterling silver. For most of the nineteenth and twentieth centuries, the majority of currencies were based on representative money through the use of the gold standard.

Well, I will not dwell on what happened with the retreat from the gold standard, as much has been written and is known of the pitfalls associated with relying on relative values that vary in mysterious ways and affect trade and commerce with inflationary and deflationary variables that vex the markets and add instability akin to nitroglycerin. But this I use as an introduction to a more virulent source of misery to the consumer as Representative Money - The Credit Card - a pre-approved form of debt extension that has come to represent, not money or simple purchasing power, but enslavement - back to the good old days of indentured servitude.

With the advent of the credit card in 1950, plastic money, there was no need any longer to strike a financed deal with the retailer for that item you wanted to purchase from him. Competition took on a new face, a freedom to present yourself in financial incognito, because the retailer no longer had access to your financial condition and vulnerabilities - you had your credit, and your pride, and the ability to consume anything you wanted, even yourself.

Fast forward to the present time and it is not so difficult to weave this evolution of access, excess, and credit markets into the problems evident today, excesses that expanded exponentially to meet and create demand for everything, from the proverbial scoop to nuts of the past, to a $300,000 mansion that we can afford only long enough to get sick of that “swimming pool” before we have to vacate the premises for default in payments.

This is at the heart of where we are today - more to buy, more of other people’s money to spend, until we are choking on scoops and nuts in forms we could not have dreamed of as part of the landscape of the American Dream. We live in a social structure where kids rival parents for advertising dollars, and quality is a victim of shrinking margins. We have Ipods and Nike shoes that all kids NEED, we have lead-laden toys, poisoned baby formula, and impotent drugs coming from our main facilitator, China. It’s all “soooo” good!

It is debt, the Installment Plan, that seeming blessing of emancipation of so many decades past that has set us on a collision course with the likes of a forming iceberg large enough to sink the Titanic. But of course, we have struck it already, haven’t we? At some point, when its people and government act irresponsibly with debt, an exemplary country, the envy of the known world, can go broke, and it’s globally contagious.  


When the USA sneezes, the world gets pneumonia


The Anonymous American January-February 2010 edition of AseanAffairs

The Anonymous American March-April 2010 edition of AseanAffairs

“Brother, Can You Spare a Dime?”
The Anonymous American May-June 2010 edition of AseanAffairs

The Anonymous American July-August 2010 edition of AseanAffairs

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