What if Everyone Became Frugal?

In the ongoing debate over early retirement, frugality, investing, and simple living, one point is often brought up by our detractors. It usually goes something like this:

Well, maybe spending less and investing more works for you, but if everybody did it, society would collapse! Our economy is driven by consumers – without them, we are nothing!

And from our own side of the wealth divide, I often get half-joking notes like this:

Don’t get too popular, MMM. I need those millions of consumer drones out there to continue mindlessly consuming so my stock investments in America’s largest companies can continue to pay me reliable dividends.

I can see the point that both sides are making, and on a superficial and short-term level, they are right.

But in the long run, I believe the picture is much brighter: society as a whole will be much better off  once we manage to convert them all to a huge army of Badass Mustachians. And here is why:

Newspaper reporters often repeat the phrase that consumers are the engine of economic growth in the United States. They say it so often that most people believe it, as witnessed by the quotes above. But when you read books written by economists (who in general know more about economics than newspaper reporters), they tell you that consumers are not the engine of economic growth. They are actually the caboose.

What is the engine of growth, then? It is the savers and investors. Only by sacrificing current consumption, can people put money into banks or share offerings, which end up in the hands of new and existing businesses who can then use that money to create new technology, factories, or human capital, allowing them to increase their productivity. Capital creates productivity, and productivity is the driver of our standard of living.

To express the same ideas on a smaller scale: Imagine an ancient fisherman who catches five fish per day with a spear. If he eats all the fish each day,  he is saving and investing none. But if he can survive on four, and use the body of the fifth one to invent a fishing hook (or trade it with someone else in exchange for a net), he has invested in capital instead of current consumption – this builds his future productivity.

As it works for the fisherman, so it works for the whole country: investment is good for building a nation’s productivity. A shortage of national investment (collectively called the “national savings rate”) can lead to a complicated spiral of international trade conditions much like the ones we are seeing now: a current account deficit, a trade deficit, and eventually a gigantic depreciation of the value of a country’s currency, and some say hyperinflation as well.

The details of that are interesting (I’m currently reading a hyperbolic book on the subject called “Crash Proof 2.0 ” by a grumpy news commentator named Peter Schiff). But they’re not necessary for our discussion here. Suffice it to say that “Saving and investment are GOOD for a country, not bad”.

This brings up the next question: “But if we’re so productive, and yet we’re not buying very much stuff, what will we do with all the stuff we make?”

It turns out that’s a great problem to have. Through the natural action of free markets, we’d end up doing a mixture of two things:
a) Exporting way more stuff and importing less
b) Choosing to work less and having shorter working hours.

To understand why that would happen, you just have to look at the actions of individuals again. If you’re working alone on an island, you only need to produce whatever you want to consume. If an entire society gradually decides that it wants to consume less, then it needs to produce less as well.

If there is less stuff that needs to be produced, then people don’t have to work as many hours to create it. That’s perfect, because many people will be dropping out of the workforce much earlier as they finish earning the money they need to get going on their early retirement. The shortage of available work will be balanced by the reduced number of people willing to do that work.

The last issue is, “but how will they pay for their early retirement, when all stock investments have collapsed due to the shrinking economy?”

I believe that’s just a misunderstanding of the effects of market forces. When a society decides it needs to earn less money, it can happen in a mixture of two ways:
1) people can work shorter work weeks, but similar career lengths
2) people can continue to work long work weeks, but save and invest the extra income for earlier retirement

Either way, there will always be young people looking to get ahead quickly and companies looking for cash to finance productivity improvements – these people will still need loans to start and fund companies. Similarly, there will always be mobile people in need of housing – and so real estate (just another form of capital) will continue to provide returns in the form of rent payments. Capital will always have some value, and thus the concept of investment will remain valid.

So, frugality as a whole would work very well for society. We’d produce less, and we’d earn less, but that is perfect since we would consume less as well.

With the basic economics out of the way, now we can get really idealistic. This growing group of newly-frugal people probably wouldn’t just sit around and gaze into the oak trees all day. A certain portion of them would actually be even more motivated to produce new things than they were when under forced employment.

So, they’d start working again. But without much demand for consumer products, society would probably value different things. Some people would be willing to spend more to buy all-renewable energy. This would create market opportunities to build more of the stuff. And it turns out that there are many trillions of dollars of work to be done in that area. Other people might be willing to spend on better health developments, building up developing countries, or improved educational opportunities.

If you check in on what Bill and Melinda Gates are up to these days, you’ll see a perfect example in large scale: people who no longer need to work for money, keep on working with the goal of helping the world instead. I want you to do the same thing once we’re finished getting rich together here.

All of these new desires would create more market demand, pulling workers into new fields and causing further growth of humankind’s capital. The free market would do its usual job of allocating resources efficiently, and it would feel much like it does today.

So you see, there is really no magic to the fact that we are currently buying and throwing away a lot of junk. Far from being a boon to our society, it’s really an enormous tax we place on ourselves, because it diverts our energy away from more beneficial efforts like the ones noted above.

In the short term, a massive switch to frugality would cause an economic depression, as the free market struggled to reallocate everything. Many people would suffer. But by creating a small and constant shift to a new way of living, the system will have time to adjust gracefully over time.

Luckily, there are only a few tens of thousands of Mustachians so far. The world isn’t in a rush to bend to our ways.  But together we’ll get this thing fixed, if we just keep the pressure on, slow and steady, until the job is done.


  • rjack April 9, 2012, 6:23 am

    MMM, What you describe is exactly what I hope happens – a gradual change towards reduced consumption with a commensurate increase in quality of life.

    I often wonder whether my great-great-great grandchildren will look back on this historical period of high-consumption/never-ending-forced-work as bizarre and stupid.

    May the force be with you!

    • MStephens April 9, 2012, 7:48 am

      I agree with your comment about our children, and I hope it comes true. Today, though, I get strange looks from my parents when I casually mention that I don’t WANT stuff (on a holiday like Easter, this is almost sacrilegious) that I would prefer quality time together, or experiences together. The middle-class mindset is deeply entrenched in their generation.

      • Rich Schmidt April 9, 2012, 6:38 pm

        You could always ask for “stuff” for others — like clean water via http://www.water.cc, or a microloan via a gift card from http://www.kiva.org.

        • MStephens April 10, 2012, 5:06 pm

          I’ve tried that. It’s a great idea, but my mom just can’t believe that I would enjoy seeing someone else get clean water MORE than I would enjoy another piece of cothing from Kohl’s.

          • Kevin April 13, 2012, 12:37 am

            Oh man! I have the same problem with my own family. They are All a bunch of shopoholic addicts that have to buy the same old worthless crap to fill up their 3,000 sq ft homes. Frugal living FTW.

            • Kokuanani May 26, 2013, 7:15 pm

              Perhaps on the next mandatory-gift-giving occasion you could request a gift card [Barnes & Noble, Amazon, Lowe’s, whatever] and then, after receiving it and gushing with “thank you’s,” you could quietly GIVE IT AWAY to someone who really needs it.

              No worthless “stuff” contaminating your abode; someone in need gets some help.

            • Gina November 6, 2014, 12:10 pm

              That’s a great idea!

            • Jacob Karasch March 30, 2015, 9:41 am

              Maybe this would be too strange and ultimately not worth it, but maybe ask for a share of SPY or if you have kids, a donation to their 529 plan? Or possibly even a gift card to a grocery store you frequent?

              Some people are gift-givers and they just can’t cope with not giving something. Just show them that you prefer really practical gifts.

            • Settiri February 7, 2017, 5:21 pm

              I try every year and ask guests not to bring gifts to my kids’ birthday parties. One year, I collected donations, another year I tried to do used books exchange…..there are always a bunch that bring useless gifts though. So I switched to gift cards…much better.

        • CD December 31, 2013, 6:47 pm

          Here’s another really cool one!! GPS coordinates of water projects and local partners, very cool! :)


      • Joe Average February 4, 2015, 1:57 pm

        BINGO! You said it right there. We’ve suggested for years that my side of the family exchange names for Christmas. This year my sibling (always a big shopper) suggested it and it was as if there had never been a better idea… So that’s what we did… -eyes rolling-

        Anyhow – both sides, drawing names. MUCH easier holiday, much cheaper, and just as satisfying.

      • Jon May 13, 2019, 7:21 am

        I agree. My in laws give the kids and grandkids an ocean of plastic junk on every holiday, most if it is never played with and occupies a ton of space. I think the baby boom generation tends to be looked into this mindset of hyper consumption and are now too old to change. I’m not saying giving is bad or wrong, it’s just…what are you giving? The idea that this level of stuff should matter more than a little more sensibility and frugality?

    • Free Money Minute July 12, 2013, 7:19 am

      I agree. I hope things change and we are looked at like wasters of such plenty. Unfortunately, I do not see the large masses of people shifting their behavior to this degree.

    • Shanna January 26, 2017, 10:19 am

      Posting this quite late to the discussion because I’m surprised hat I don’t see it yet. In 1930 Maynard Keynes speculated that economic wealth would lead to greater personal freedom and leisure for his grandchildren’s generation. That generation is, basically, us. But instead humanity chose the direction of consumerism and slavery to debt and work. Here’s his great essay on the subject. https://assets.aspeninstitute.org/content/uploads/files/content/upload/Intro_Session1.pdf

      • late_saver June 25, 2020, 2:16 am

        Thank you so much for sharing this!! Eye opening!
        I also thought along the same lines as the first comment: one day, the times now will be looked upon as a foolish cultural-socio-psychological mistake. Every era people think that they are the advanced society and that their way is THE way.

    • Tyler March 4, 2022, 9:34 am

      If anything consumerism is ramping up. You might feel society is going more MMM but that’s only because it’s what you are doing… Look around, everyone is driving a HUGE stupid vehicle, getting bigger and bigger houses, more and more atvs, boats, and other toys. Also driven by social media gotta keep up with the Jones. Remember most of society thinks buying crap will make them more happy.

  • jlcollinsnh April 9, 2012, 6:38 am

    great analysis of a classic “non-problem.” “Non” because:

    1. It is unlikely to happen.
    2. If it does it will be at a very gradual rate allowing for easy adjustments.
    3. If it does it would be a very good thing, for all the reasons you mention.

    Let me add this.

    In a society with frugal, debt free, financially independent people the necessary and highly beneficial process of “creative destruction” vital to a dynamic economy is far less traumatic.

    • RetiredToWin Alex April 2, 2015, 11:48 am

      In any case, it is incomprehensible to me how any serious commentator can think that it would be persuasive to argue AGAINST the pursuit of a path clearly in one’s own long term self-interest for the sake of what effect that MIGHT have on Society as a whole. Even though that effect would not happen anyway. And even though such a Society-first argument absolutely ignores fundamental human nature. I mean, how can one seriously argue against a person’s desire to be, as jlcollinsnh puts it, “debt free and financially independent”?

      So, then why all the hue and cry?

      I think the whining against frugality is either (1) a commercially-sponsored attempt to maintain the advertising-driven purchase of superfluous doodads or (2) an apologist effort to give “consumers” moral cover to continue their in fact financially self-destructive behavior. Or both.

      No matter. I will not listen. Hell, I have never listened. Which is one big reason why I was able to earlier retire and live on just a fraction of my passive income. Let others spend. I prefer to live free.

  • James April 9, 2012, 7:17 am

    Another huge benefit of having financially independent people is that during a time of economic duress they are able to continue making purchases and, even more importantly, are available to purchase property and businesses at the distressed rates. Far from being a negative as so many people insinuate, this is a huge benefit to both those having to sell and the economy as a whole. It’s what provides the natural bounce back the economy needs whenever it bottoms out. Unfortunately the “too big to fail” fallacy and government interference hampered this during the last downturn and prevented the economy from reaching the natural “bottom”, which meant the bounce back is delayed and much slower in coming around.

  • JasonR April 9, 2012, 7:35 am

    I mustache you a question. But before that–has nobody in the year I’ve been reading this blog said, “I mustache you a question”? Nobody…?

    My question is: do you read the ERE forums? This blog topic is covered ad nauseam there about once per month. It’s pretty much Kant’s categorical imperative. Immanuel covered the premise fairly well in 1785 and others have critiqued it since. Locke, Mill, Hume, and even good old Augustine touched on similar ideas in their writing. Not that your writing is anything less than what the greatest minds of Western Thought have to offer, but these guys already did a bang up job and everybody here already agrees with you (save the few who don’t–but answering a philosophical question with a philosophical answer leads to…face-clawing talking).

    One thing those crusty old white dudes can’t write about (not just because they’re dead) is PEX piping. That stuff is mind-melting. Leave Aristotle in the proverbial dust. Will you teach us how to build that set up you rigged together in the foreclosure kitchen?

    I think Jacob was right, after a year of writing about PF, there isn’t much more to say:

    1 – save 50+% of your pay.
    2 – Cut expenses and invest.
    3 – ????
    4 – Profit.

    What’s left? Waxing eloquent about Deontological ethics vs. Consequentialism? We won’t get anywhere. The MMM how-to’s are where it’s at since they go beyond cutting coffee and cable and delve into things that can increase my marginal utility, like being my own plumber or framer or car doohickey welder.

    Anyway I’m sure people spend enough time telling you what you should do so I’ll stop and engage in the de rigueur of the comments section: Great post MMM! I agree!!!11!one!!eleven!! What if we all became doctors or garbage men?!?!

    • nd April 9, 2012, 9:34 am

      To this, I think Richard Feynman had the proper response:

      “The ideas I wish to describe are old ideas. There is practically nothing that I am going to say tonight that could not easily have been said by the philosophers of the seventeenth century. Why repeat all this? Because there are new generations born every day. Because there are great ideas developed in the history of man, and these ideas do not last unless they are passed purposely and clearly from generation to generation””

      I’m guessing that you didn’t first come across these ideas by reading Kant. Even if you did, most of us did not. We come across these ideas because someone like MMM was purposely and clearly explaining them and we happened to be listening.

      • JasonR April 9, 2012, 11:13 am

        I agree the concept is important. I got mine from Grandma and Jacob at ERE. Now that we’re all in the same boat and agree on these wonderful ideas…how do I row?

        I don’t think preaching to the choir gets our ship moving?

        I may read one book multiple times but I don’t keep 17 copies of it on the shelf. Nature is cool. Frugality is cool. Now how do I figure out how much lumber it takes to make those kitchen shelves/cabinets? This MMM guy knows. He’s a wealth of utilitarian knowledge. The philosophy is dead simple and covered in 4 sentences. We’re all very bright and don’t need to engage in thought experiments to satisfy those who don’t get it. As if online debating satisfies anything…

    • Mr. Frugal Toque April 9, 2012, 11:53 am

      There are a lot of blogs that cover early retirement
      There are a lot of people who believe in Stoicism and anti-consumerism.
      But there’s only one place you can go where they threaten to punch you in the face if you finance a new pickup truck, apply for a payday loan, leave a balance on a credit card or say anything bad about bicycle commuting.
      This is that place.
      If the sudden popularity of this blog is any indication, there are a lot of people for whom metaphorical violence in the name financial discipline strikes just the right chord to create a new harmony in the many-layered symphony orchestras of their brains.

      • JasonR April 9, 2012, 1:55 pm

        Face punching in PF blogs? Do you mean Man vs. Debt? Because Adam Baker has been doing that since 2009. I think his old tagline was “Punch Debt in the Face”. Somebody else may know better since I never really read that blog. But you can try there for extra face punching.

        But ManvsDebt never told me how to use PEX to run supply lines to my utility sink. Thanks to MMM I can now do supply side plumbing (or attempt to) which may save me several thousand over the course of my life. Thanks. Way better than talking about things that have no end. So what’s next? Kondratiev wave discussions? End of the World DooOOoom discussions?

        My point is philosophy should be left to the pros. Since the idea of ERE/MMM is very important and *very* simple, it could easily be covered with a simple 3 or 4 sentence summary of the ideology at the start of each post and then we can skip the eternal debates and dive right in to the useful stuff. The concrete application of the philosophy as it were.

        Maybe even how to pour concrete…

        • Mr. Money Mustache April 9, 2012, 4:09 pm

          Sorry, JasonR – I appreciate your appreciation for construction tips, but you’re way off on the mission of this blog. This is not something that picks up where Early Retirement Extreme leaves off. Here, we’re doing everything from scratch, because that’s what the biggest group of the readers seem to find interesting.

          Every day, I get a few million emails wondering what would happen if everybody is frugal, or encouraging me to preserve consumerism so our society doesn’t collapse. So today, I wrote the Official Answer.

          There are lots of people here who read Early Retirement Extreme. But there are about a hundred times more people for whom every idea is absolutely new. They haven’t yet read philosophy books or the ERE forums, or even the MMM forums.

          We need to break this shit down and present a complete picture, because many people don’t want assignments to go read something else – they want their answers delivered automatically and conveniently, so we’ll put them right here.

          As for Man vs. Debt – I don’t see much punching there. Adam Baker is a good man and he can sure play the heartstrings with those trademark one-sentence paragraphs. But there’s still room for Mr. Money Mustache approach, once Man has won his initial battle with Debt and is ready to go further.

          But don’t worry, there are lessons on welding and concrete coming up too – after all, we’re well into summer projects season here at MMM headquarters! :-)

          • JasonR April 9, 2012, 4:51 pm

            No need to apologize.

            I had no idea so many people were new to and/or struggling with these concepts nor was I aware of how the readers’ interests broke down. I figured after a year of your posting this was old hat and we were all on the same page.

            Well that’s good news. I’ll check back for those construction posts once the kids are in bed and you’ve washed the masses.

            • Mr. Money Mustache April 9, 2012, 6:31 pm

              Yeah, it’s one of the more interesting aspects of blog-writing, as it turns out. Your natural tendency is to assume that the people reading are your friends who showed up at the beginning, and now we’ve all been hanging out together for a year. But really, there are a few people left over from the beginning, and many have been lost on the way, since the Internet is a busy place. Then there are people who joined in at every stage along in between, some were lost, some are still here, and people who are just showing up here for the first time today.

              On average, however, there’s a perpetual situation, depending on the growth rate, where more than half of the people are fairly new and have no idea what you wrote about earlier. A few of them go back and read everything from the beginning, but those are only the most truly badass new students. If you write everything by assuming everyone has read everything in the past, you’ll end up with a really esoteric and increasingly specialized blog that is of no use to the new people.

              Instead, it’s fun to be more of a preacher, where both old and new ideas are mixed together in new ways and re-preached. But I also appreciate the shout-out for construction stuff, since I love writing about that too. Plus, it’s what I actually spend the largest bit of my free time doing so it’s on my mind a lot. There is just SO much that still needs to be built, culminating in the self-sustaining home on a sunny hillside overlooking the mountains.

            • Melanie April 9, 2012, 7:40 pm

              As one of the newbies to all of this who is just learning, I really most enjoy this type of post. I have a PhD in the social sciences (after all you computer and finance people finish gasping, yes I make decent money at this). So, while not stupid, I am really uneducated about all this stuff. But trying to learn!

              For all this talk about face punching, I think what is appealing about MMM is actually the very obvious softy side here (sorry to tarnish your rep). I mean, you’re good at trying to make everyone happy here in the comments section (i.e., patching up the tiffs in a diplomatic fashion; saying things nicely to people who are trying but don’t always get it, like me) and feel welcome (unless someone is just obviously making anti-mustachian comments). And, you sign your intro on your home page “Love, MMM” for goodness sake.

              Come on guys, it is not the face punching combined with finance that makes the blog appealing to so many. It wouldn’t work without the obvious heart behind it. I would guess that a big reason the blog has grown is 1) because people feel they can identify with MMM (which has been said here before) and importantly 2) people believe that he would care about them and their situation.

              Damn, sounding like a suck up now. For those here that actually know the real MMM say “Aww” and give him shit, or congratulate him on his shrewdness of using psychology to help become a blogging empire!

              Keep this kind of post up!

            • Hanne van Essen April 11, 2012, 3:10 am

              I am also a newbie to this. And just because I understand the basic idea, which can indeed be explained in one paragraph, doesn’t mean I don’t need to read about it more. Indeed Mr MM is a preacher. For example the whole christian-religion-idea can be described in one paragraph (God, heaven, Jesus, son, sins, be good), but people still go to church every sunday to hear that message they already know.

            • Nick Bucher August 8, 2012, 7:44 pm

              Hi MMM,

              I discovered your blog a week or so ago and am reading through from the beginning.

              I think the easiest way to demonstrate a society that has embraced frugality would be to point to the modern economy of Germany. They have had to dig themselves out of the deepest financial hole in history and it was all done by the individual frugality of Germany’s people.

              Their corporate culture is much the same. I was amazed when I learned that the Aldi stores being built in Australia were being built with cash rather than coroprate loans.

              I look forward to the day I join you and the other Mustachians in FI.

            • Eric April 16, 2016, 9:11 am

              Sorry, have to disagree that Germany’s good fortune is all due to the virtuous thriftiness of individual German people. The problems in Europe over the past decade basically all came down to problems with the set-up and management of the Europe-wide financial system with its common currency, and Germany had probably more control over this system than any other country. So it makes some sense to blame Germany, and especially German bankers, for the woes of Europe. Thrifty individual Germans had very, very little to do with it.

            • Giovanni May 8, 2013, 2:47 pm

              Your words struck me like lightening: “If you write everything by assuming everyone has read everything in the past, you’ll end up with a really esoteric and increasingly specialized blog that is of no use to the new people.

              Instead, it’s fun to be more of a preacher, where both old and new ideas are mixed together in new ways and re-preached.”

              I instantly recognized myself and my own blog posts and it’s opened my eyes to a much better approach to writing.

              Thank you MMM!

            • James May 20, 2013, 4:37 pm

              Have you considered making a home construction / efficiency upgrade / sustainability blog in addition to MMM?

          • Curt and Ani and Fitch July 21, 2014, 8:24 am

            My name is Curt. My wife Ani and I (and unbeknownst him, our 3 year old, Fitch) have been all-in with the Mustache-maestro for the past few months, slowly catching up on articles from the beginning of time. We are a perfect example of people who were introduced to MMM years after the fact and appreciate any redundancy or repetition. In fact, I think even the most educated and instinctive in the ways of badassity would be a bit naive to think they don’t benefit from repeat ideas. They are what help us to remember the course and keep us on it.

            Question: Who’s phone number is 867-5309? The reason we know the answer to that in an infinite pot of phone numbers is because it was played through our minds over and over (and over and over, etc.) again. Repetition is one of the best memory aids. I am a natural Mustachian from birth, my wife is not. Still, we both are the same in that we need reminders to keep us dominant in the battle for our own free minds in a world of stealth consumption slavery.

            Trying to stay on topic here, I’d like to add that JasonR’s point is not bad at all. In fact, it is excellent and practical, as the Grand Mustache Poopah has commented on. It just needs to be in addition to the basic principles of Mustachianism. We are a rare family of self-employed artistans (Makers by definition) that custom create unique handmade furniture and decor items with many different building materials (wood, metal, glass, etc) for customers tired of the same ‘ol, same ‘ol. I have spent the past 20 plus years learning just enough working in the trade fields to make me helpful… that combined with an inherent artistic leaning… to become a professional DIYer that creates attractive and artistic heirloom quality furnishings. Actually, we DIFY (Do It For You), for a living.

            We have often talked about using our site to teach but felt we lacked the knowledge, time and funds to earn the online following that would actually make it helpful to folks. When reasonable, we believe giving, not taking, has played a dominant role in our happiness and contentment.

            That said, we are grateful to MMM for his hard work and helping us to identify the right course for our personal lives, even beyond finance. We also value learning that it is alright to live by this lifestyle which we believe is best on so many levels and that we are not alone in doing so. We’re glad our good friend one day told me in conversation, “Dude, you’re Mr. Money Mustache!”

            We would like to give back if it is ever wanted. MMM, we realize you don’t know us at all. Still, if you ever could use some help from a contributor in the ‘Make and Fix Your Own Awesome Quality Aesthetically Attractive Stuff for Cheap’ category of the blog, we would be happy to assist. Though unrealistic, we would love to create for people here in South Florida for nothing. Maybe with MMM principles in mind, that’s not totally unrealistic some day down the road. But if, even now, some creative how-to’s could help readers of this blog, we would be willing and eager to to make time for it. No pressure.

    • James April 9, 2012, 2:59 pm

      Yes. I think those of us who came here from ERE (or any other early retirement blog/website) have grown tired of reading about the things you mention–‘preaching to the choir’ and all that. Like you, I would kill for more posts about practical skills–especially those dealing with construction/home ownership. I’m sure there are numerous websites devoted to construction skills and the like, but I doubt many of them would be frugality minded, beginner oriented, and have MMM’s signature bluntness.

      That being said, I’m sure my end-of-semester exhaustion is just rendering me a gigantic wussypants when it comes to researching practical skills on my own.

  • Jeremy April 9, 2012, 7:48 am

    It would be quite interesting to see how society would react to something like this. With all the media pressure though, it is quite unlikely to be a sudden shift. It will be a constant game of tug of war. Governments would be on the side of consumerism so that they can continue raking in big tax money. What would they do to fight back if the frugality movement gains more steam?

    • Joe Average February 4, 2015, 2:03 pm

      Tax savings and investments of the common man…

    • IAmNotABartender March 18, 2015, 7:55 pm

      The government could use some more frugality, too. ;)

      • Ralph December 19, 2015, 7:06 pm

        Ain’t gonna happen. Most governments are hell bent on military spending at the moment and the possibility of that spending going down soon is zero.

        It would be good to see them build railways and maintain the infrastructure we have now rather than waste money on better bombs and planes.

        Slightly off topic, sorry, back in my box now.

    • Lennier December 5, 2015, 4:32 am

      With more people moving to Frugality, we’d have less “stuff” being shipped from one end of the country to the other. less stuff means less trucks. Less trucks means reduced cost of building highways (damage to roads is to the 4th or 5th square of axle weight) because they don’t need to be so thick (railroads would tear up unused track eventually and cascade it to other parts of the network).
      And that’s before you even start to deal with the bald-faced porkbarrelling.

  • Josh Patel April 9, 2012, 7:58 am

    Supply Side doesn’t really work all that well. If it did then all of those trillions in the bank, and sitting as profits in company accounts would be used. Look at Apple, it has so much money in the bank it doesn’t know what to do with it. So yes Supply side works, but at some point you really need to increase demand.

  • carl April 9, 2012, 8:07 am

    Shhhhh! Don’t let Paul Krugman hear you speak such sanity!

    Seriously, what you say would be true if we weren’t so debt ridden: as individuals, as a nation, as corporations. With all the debt on the books, the economy must ever grow to feed the pyramid scheme.

    Ever since the Great Depression, our government has been encouraging debt and overspending to keep boosting the GNP/GDP. Few pause to consider what these numbers actually measure.

    If both parents work and send their kids to daycare, GDP is boosted. Whether more child care is actually being produced is debatable.

  • GregK April 9, 2012, 8:07 am

    Whether or not you’re right depends heavily on what the “Golden Rule” savings rate is… which is up for debate! In any case, it’s hard to imagine the US’s current savings rate is the optimal one. Most economists would argue that a higher rate of savings would lead to higher long-run growth rates.


    • Geraldine March 28, 2015, 6:00 pm

      This is probably the only comment on this page that makes sense. Cheers from one economist to another :)

  • GE Miller April 9, 2012, 8:20 am

    It seems like those who don’t want to admit their work-buy-dump-repeat cycle is complete shit are the ones who raise the “if everyone did it” argument.
    I think a lot of this is due to:
    1. Their conformist beliefs and a bit of ignorance. They believe that if your way is the right way, it would already be the norm in society. They don’t realize the norm was created by ads.
    2. They want to vilify or put your philosophy down as being un-Patriotic. America is the best! How dare you challenge my/our wasteful way of life! They do this b/c admitting you’ve wasted years or decades of your life chasing shallow happiness is a very frightening thought. It’s self defense.

    The change will be a slow process b/c it takes many years to unlearn all of the advertising, over-consumption, and wastefulness most of us were brought up with. And we all realize it at different points in our lives.

    Make no mistake though, the groundwork for change has been set for change and the meme is spreading like wildfire.

  • Cindy@Rhinebeck April 9, 2012, 8:37 am

    You forgot to mention entitlement programs. Should people work less, they can no longer expect free health care or other social endowments, such as food stamps, unemployment benefits, social security, medicare or medicaid, heating assistance, federal/state education loans, welfare….etc.etc.etc. Every single person will be on their own. Also, less taxes mean less public schools (less work means less taxes will be collected OR higher taxes will be placed on what little income a person makes in their shortened working lifetime). Less taxes collected will be less services, such as libraries, roads, bridges….well, you get the picture.
    If people work less, how will they be able to save up and provide for themselves in their older years if all entitlement programs cease to exist?
    You don’t have to imagine this. Just look at Europe. They are going through a debt/entitlement crisis right now. They got 6 weeks vacation, summers off, 4 day work weeks, live smaller lives than we do (they consume and buy less). How are they working out? Now that they are broke, the reality is they can no longer afford their own entitlement programs. Less police. Less firemen. Less medical and other services. Less retirement/pension packages. How are their rioting fits of anger working out for them?

    Do you really want to go back to living a life like your great-great-grandfather???

    This theory, though while it sounds wonderful, if everyone became frugal, would be an economic disaster. I’ve been frugal/debt free most of my life. But I know if everyone were like me, the world as I know it would come to an end. And I wouldn’t like it very much.

    The problem is OVER consumption. Not just consumption. Waste is NEVER a good thing. That’s what needs to be eliminated. You don’t cut off your nose to spite your face. You live within your means. You buy what you need. Borrowing money to buy a home, fund a business or an education is NOT necessarily a bad thing. Charge cards are NOT the enemy. The person behind the charge card who recklessly overspends, and can’t repay, is.

    • No Name Guy April 9, 2012, 9:39 am

      [Laughs heartily]

      “If people work less, how will they be able to save up and provide for themselves in their older years if all entitlement programs cease to exist?”

      Cindy – you…..just…..don’t……get…..it.

      FI = Financial INDEPENDENCE. If you (and every individual in society) is INDEPENDENT, there is zero need for theft for so called entitlements.

      To use the fish analogy – if one becomes so productive (and frugal), they can catch their needed 5 fish in only an hour, then they’ll fish a few extra hours a day while they’re young and strong and salt (e.g. save for the future) the resulting bounty instead of trading their extra fish for the latest iCrap or this years “Must Have” fall fashions. The makers of iCrap and this years latest fall fashions, realizing there is no more market for their consumerist garbage will switch to being fishers instead, or perhaps to building fishing hooks or fishing boats.

      Being frugal savers, when our fishers become sick, they’ll dip into their stores of salted fish and pay their neighbor, the doctor, to practice his art on them.

      When our frugal, productive fisher become old and no longer able to fish, they’ll have a large stock of salted fish to draw upon to sustain them through their elder years. Or, they would have traded their salted fish for a fishing boat, which they then rent out to young fishers for the price of 7 fish a day (5 to live on plus 2 extra to account for down time and maintenance). The young fishers WANT to rent the boat, since they get get far from shore where there is greater schools of fish and less competition (and they realize that they can catch 20 fish an hour way out there, so even after paying our guy 7 fish a day, they’re still WAY ahead of fishing from shore).

      Your mistake Cindy is in thinking that an individual is incapable of taking care of themselves. Jacob, MMM, et al have proven that individuals are quite capable of that.

      • Gerard April 9, 2012, 11:04 am

        I think both Cindy’s statement and No-Name’s response set up an either-or that isn’t necessary. The world is full of places with stronger social safety nets than the US (places that consider the word “entitlement” right-wing Newspeak) and higher savings rates. We offload some aspects of our need for savings — health insurance, for example — onto the collective. This is actually more efficient, in the same way that group pension plans are — each individual doesn’t have to save enough for unlikely but possible catastrophic failure. By embracing interdependence rather than independence, we actually reduce our dependence on employers by reducing our Fuck-Off-Money threshold.

      • crazyworld April 9, 2012, 11:46 am

        what if you suffer a disability? or have a child that does? Jacob is young, so is MMM. Also, Jacob is back at work, and very well paying work it is. His cushion is nice and fluffy. How many people can claim that much brain power?

      • Cindy@Rhinebeck April 9, 2012, 2:25 pm

        No Name Guy (I love people who comment BUT don’t use their own names)……are you retired? I am. I retired very young. Mortgage and debt free. I can live on $816 a month. Can you? Would you even want to?

        If you want to see what frugal living for everyone will look like, just look around at our failing economy. No one has money to buy or do anything. How’s that working out? Sony is laying off 20,000 this week cause no one is buying technology. Yahoo is laying off 2000 this week. Because few are using their internet services. And if more pressure is put on Apple to pay it’s workforce higher wages, Apple productivity will slow down and prices will rise and innovations will trickle.

        And if gas keeps going up, we’ll all be riding donkeys.

        Your fish analysis is just that: a fish story.

        I don’t buy iCrap stuff nor was I ever a slave to fashion. But I do live a heck of a simple life. Do you? I’ve been taking care of myself, probably since before you were born. And what I learned along the way, is that you need a continual supply of MONEY to survive. A stream of Cold hard cash. Not fish! And not some idealistic pipe dream.

        Know what happens to salted fish when you stock it for long periods of time? It stinks. Just like your pathetic fish story. Which is preposterous BTW.

        Look at this 60 minutes news report CBS broadcast last night. This is your future:


        Also, if a ‘fisher’ starts getting ideas that he can catch 20 fish per hour vs 7, that’s called capitalism. Duh? Eventually the ‘fisher’ will figure out he can set up a cannery, then a franchise and then, go global! Selling fish. SELLING. The ‘fisher’ must continually sell fish 24/7/365. To Everyone. Even meat eaters. That’s called ‘consumption’. Literally.

        Also, go rent the movie ‘Margin Call’. You’ll see how the world is really stacked against you and how you have no control over your own future unless you did indeed live out in the wild blue yonder and had to hunt and fish for your dinner. Like the cave men. Yeah. That’s it. The cave men.

        People who had the life expectancy of 20 years. Give or take.

        Is that what you call PROGRESS?

        If everyone practiced frugality, we all would be living back in the stone age. It’s unfortunate that many people today are forced to be frugal through no choice of their own. Frugality does NOT make the world go round. If everyone did it, the world would stand still. Just like it is right now.

        Frugality should be a choice. Not a mandatory position. I have no choice anymore. I MUST be frugal. Or perish.

        • Bakari April 9, 2012, 3:56 pm

          That is exactly what they want you to think.

          Per worker productivity has increased 82% since 1988 (as far back as the BLS website stats go) while average pay has gone up by all of 4%. (Don’t take my word for it: http://stats.bls.gov/data/ )
          Are Sony and Yahoo still paying dividends on their stock? Are they still paying their executives multimillion dollar compensation packages? (Yes, Sony CEO took a pay cut last year… to “only” $4.25 million) As long as those things are true, the companies aren’t laying people off out of economic necessity, they are doing it to maximize profits.

          “No one has money to buy or do anything.”
          What country do you live in?
          The iPad 3 – replacing a virtually identical iPad 2 which came out all of one year ago – sold 3 MILLION in 3 days!!
          While it may be a more convenient choice for some people in some ways, there is no way anyone can argue that it is a basic necessity.
          Comcast has 23 million cable subscribers – that’s just one company – for a product that is pure luxury.

          And BTW, “cavemen” lived nearly as long as we do. The reason the average life-expectancy at birth was only 30, was because so many babies died in the first 5 years of life it dragged the average down. Assuming an individual lived to adult-hood, they would live anywhere from 50 to 70. http://business.highbeam.com/4438/article-1G1-166092448/longevity-among-huntergatherers-crosscultural-examination

          • Martin June 11, 2013, 9:38 am

            Hey Bakari,

            I’m real late to this party, but I just wanted to let you know that apart from what Mr Moustache himself writes, your posts are just great! Informative and well-written — thanks!

            • ov January 26, 2015, 3:33 am

              I agree! The first few Bakari comments I read on this blog got a “woah, this guy is crazy” response from me. But, as I read more, I came around to really appreciating and eagerly waiting for more. Well thought-out and informed by scientific research.

        • No Name Guy April 9, 2012, 4:05 pm

          Ms Cindy: I’m sorry you’re such an angry person – it comes through in your writing. Perhaps you should seek some help.

          Here’s a little help for you on understanding the earlier post, since you still don’t get it:

          Fish = metaphor for money.
          Salted Fish = metaphor for cash savings.
          Fishing Boat = metaphor investment in income producing asset.

          The fisherman story = a parable of how one can only consume the net of what is produced, and how, by living below ones means (e.g. salting away some fish) by living on less than you produce, one gains long term independence.

          Oh….and I’m not going to get into a pissing contest about who better that who at being frugal or retiring earlier that who.

          • Mr. Money Mustache April 9, 2012, 4:19 pm

            Thanks, No Name Guy and Bakari – I believe that Cindy has noble intentions behind the comments above, but she doesn’t have a solid enough understanding of economics to sort out the effects of proposed changes to an economy.

            That’s is not meant to be an insult – you can learn those things with just a few textbooks and it’s not a character flaw to not have read those textbooks yet.

            But I just wanted to chime in and say – No Name and Bakari are right in this case – no question about it.

            • Cindy@Rhinebeck April 10, 2012, 9:32 am

              OMG. I don’t have to read textbooks. I just have to look at Japan. They have the highest savings rate and are living proof that your frugal world theory wouldn’t work. Japan is entering it’s second lost decade with America not far behind.

              That’s the problem with elitists. They get their information from theory, opinions and textbooks. I get my info from living in the real, actual world. It’s a sort of 6th sense. It comes from experience, NOT reading textbooks. Ugh.

              As for the person who thinks the selling of 3 million iPads will solve problems, in my neighborhood, as in many other American neighborhoods, businesses are closing their doors each and every day: hardware stores, restaurants, clothing stores, etc. etc. Why? Because people do NOT have the money to buy things. Without productivity and MONEY, everything stops. Consumerism makes the world go round and round. Has since the beginning of time. You guys can not change that no matter how much you pontificate. If everyone in the world became frugal, everything would collapse. Period. Frugality should be a choice. Not some mandatory style of living. Commerce and trade is what spins the world around.

              Am I angry? Of course. Stupidity ALWAYS makes me angry. And I dislike metaphors. Bye guys. Go back to imagination and smoking whatever it is that y”all are smoking.

            • Mr. Frugal Toque April 10, 2012, 11:32 am

              I’m trying to find a definition of “elitist” that could possibly make sense in reference to the people with whom you are arguing.
              I’m assuming it’s some kind of American slang usage which takes the implication of literacy and education as some kind of insult.
              As for Japan, they have a high savings rate, high average income and they design way more efficient cars than Americans do and have for decades now. (Even during the “lost” decade, whichever that was … did you read about it somewhere?)
              The effect you are seeing, with stores closing, is that people overspent their incomes and used easy credit to do it. That resulted in an over supply of retail outlets which now have to shut down as things are rebalanced.
              Of course, it sucks. It always does when the heroin runs out. But once the withdrawal period is over, things will be in balance again.

            • Shiznik April 10, 2012, 3:43 pm


              I am saddened by how much anger and resentment is twisted in with your writings. There is nothing wrong with having an opinion, but there certainly is something wrong with being hate filled about differences in opinion.

            • Joshua Holland April 10, 2012, 3:56 pm

              Hi Cindy.

              Is Japan a troubled nation due to lack of consumption? Can you give me any examples?

              Unemployment is significantly lower than in the US.

              GDP per capita growth over the last 10 years > the US.

              Japan is a troubled nation. But the major reason it is in trouble is because of an aging population AND an older generation who refuse to pass the reigns on to the next generation. This is limiting the prospects of the younger generations while at the same time burdening them with dependents.

              The problems Japan faces have very little to do with consumption or the lack of consumption.

            • Joshua Holland April 10, 2012, 4:19 pm

              In truth the problem is actually one of over consumption. People have spent all their money and then some. So when a crisis comes along they have no way to deal with it.

              When society realises the economy isn’t going so well they get scared and cut consumption. This causes a crash! We get scared because we have little savings and thus have little power.

            • Mr. Money Mustache April 10, 2012, 5:21 pm

              YAHOO! RIDE ‘EM COWBOY!!!

              I just had my best laugh in years as Mrs. Money Mustache read Cindy’s final comment to me in her best dramatic voice.

              Out of the Nine Thousand and Fifteen approved comments that have been posted on this blog so far, I can confidently award that one the LEAST MUSTACHIAN COMMENT OF ALL TIMES AWARD!!!

              We could easily spend the next year and start a whole new blog just to analyze everything that is wrong with that comment (and if any readers want to do so, I’ll gladly link to it). But my favorite part is just “OMG, I don’t need to read BOOKS. I just look at JAPAN!!”

              So yeah, you look at Japan. Do you “look” at it in an atlas? Do you “look” at it by watching Fox News or reading the little quarter-page newspaper reports in USA Today? Do you travel to Japan and look at the cherry trees? Or maybe you’re way ahead of us and you’ve interviewed the Japanese finance ministers and their prominent economists?

              I’ve “looked” at Japan a little myself too. But I did it by reading most editions of The Economist since 1994 and, yes, reading a few more of those smelly books you don’t like. I’m still not qualified to state exactly what caused that country’s economic problems, but I get the impression it was much more one of stubborn crony politics (even more than we have here in the US), rather than a lack of consumption.

              Your problem is much easier to diagnose: you were reading the wrong blog.

            • Bakari April 10, 2012, 6:38 pm

              First you acknowledge that people are buying ipads – then you claim no one has money to buy anything?
              The reason independent local businesses are closing is because they can not compete with the giant corporations which have the capital to automate, outsource, and buy out rivals. When WalMart opens up in town, every local business that competes with them starts dieing.

              And just to be clear – you are talking about this place:
              and this place:
              …as a place of LOW consumption?

              Where 1/3 of all elementary school children have cell phones? Where there is one vending machine for every 30 people, and 13,000 shopping districts in just 785 cities? The world capital for electronic gadgets?
              Seriously, you couldn’t come up with a better example of a place with low consumption?

            • Bakari April 10, 2012, 7:26 pm

              y’all know what is REALLY interesting about Cindy and her comments?
              Out of curiosity, I took a glance at her blog… and found the following quotes:

              “It may be a time for a re-set of our priorities and what we may find more important in our lives. Less of a time to worry about new clothes and more of a time for a rebirth in something new and different.”

              “…food waste is not only a money loser but wasteful to our environment”

              “…trade in your gas guzzling vehicle for a fuel efficient model, do so. If you can cut down and back on your driving habits, do so. If you can car pool, take mass transit or move closer to wherever you need to be, do so.”

              Sounds a lot like a Mustachian to me, even if her understanding of economics does come from conservative talk radio.

            • Eric February 7, 2014, 10:39 am

              Mr. MMM, I appreciate the ideas you spread through this website about living a more frugal, less materialistic life. There is however nothing political about saving money and being frugal. I think this site moves two steps backwards everytime I see a comment like, “So yeah, you look at Japan. Do you “look” at it in an atlas? Do you “look” at it by watching Fox News or reading the little quarter-page newspaper reports in USA Today?”

            • kmgunder August 19, 2014, 12:54 pm

              Hi All,

              This is my first comment here on the MMM Website, which for the most part I’m enjoying very much and from which I have learned a great deal. I look forward to learning more.

              Interesting reading these posts. I think anyone who thinks they have the absolute answer to this question probably doesn’t. I think there are a lot of unknowns and consequences we probably couldn’t quite predict. Perhaps we have models from previous societies but how much different is the world today than from when those societies existed. If you think you’re certain and know the answer, think again and then think again. Even much of what is considered smart money management involves factoring in uncertainty.

              One thing I am pretty certain about though is that our society could use more kindness. I’m seeing a lot mean posts here and people ganging up on and making fun of each other, calling each other names. It’s unpleasant to witness. So please be kind to each other. We need more civil discourse.


            • Matt (Semper Fi) July 31, 2016, 11:54 pm

              Late post, but I’ll give another damned good reason why a lot of brick-and-mortars are failing — people are shopping via the Internet. Those stores are not failing just because people are too broke to shop – hell, that’s never stopped consumers before, has it? Hahaha. And stores go out of business ALL THE TIME. Bad management, shitty product, bad location, pricing out of whack, competition, etc … the reasons are legion.

        • Johonn May 2, 2012, 10:04 pm

          Have you ever thought that companies cutting back might be a good result of frugality, rather than a crisis? Do you really think that businesses and the economy can just keep inflating and inflating without ever stopping? At some point, something has to slow down back to sensible levels, or the whole system will crash. In this case, the system sort of had a fender-bender and woke a whole lot of people up, who now realize that their style of spending does not work with reality and a viable future. The bubble of hyperconsumerism can’t keep expanding forever, at some point it will get stretched too thin and just pop. Or we could let some air out instead of continuing to put more in, which is what this blog advocates, in my understanding of it.

        • Lennier December 5, 2015, 4:40 am

          “And if more pressure is put on Apple to pay it’s workforce higher wages, Apple productivity will slow down and prices will rise and innovations will trickle.”

          Workplace Productivity is not output-per-wage-unit. It is output-per-time-unit.

      • BeyondtheWrap April 10, 2012, 8:36 pm

        But if everyone starts buying fishing boats to rent to young fishers, this will drive down the rent prices as you will be competing with everyone else who is doing this. For example, the rent might go down to 3 fish per day. Then you would need more than two fishing boats to get the same amount of fish as in the original scenario. Meaning you would need to salt a lot more fish while you’re still working in order to afford the additional fishing boat, which means you would need to work longer before you’re able to retire.

        For the real world scenario, if everyone retired early, the abundance of savers would drive down interest rates and people would not be able to retire as early as is possible now.

        To me, this does seem like a reasonable consequence of everyone retiring early. What do you guys think?

    • Marcia @Frugal Healthy Simple April 9, 2012, 12:53 pm

      Are all countries in Europe going through this? I have a lot of friends in Denmark, and none of them have mentioned any particular crisis.

      • turboseize April 9, 2012, 2:17 pm

        Crisis? What crisis?

      • Geraldine March 28, 2015, 5:51 pm

        Denmark had a severe crisis in 2008/09, leading to bancrupt banks, rising national debt, high and prevailing unemployment especially among the young, and an imploding real estate market that left 1/3 of all Danish households technically bancrupt. Are you sure your friends are Danish and not Norwegian?

    • Nuno May 27, 2016, 5:50 am

      I live in Europe and i don’t work 4 days a week and know any country who does.
      I have 4 weeks vacation per year.
      And we don’t live less years than americans.
      You can’t just see something on tv and believe it.

      I’ve been in the USA twice and it’s true, i see that we buy less and consume less than you, but that is better for us.

  • BC April 9, 2012, 9:18 am

    This post makes sense (as almost all of them do), however I think there’s one key factor that is overlooked. And that is that it takes a heck of a lot of discipline to have several hundred thousand dollars in the bank and never consider touching it. Taking a look at the “unwashed masses” and things in our country that have become prevalent, such as peoples weight problems, the dismal savings rate, debt, TV watching, etc, it is easy to see that in general, many (most) people are basically sheep and will simply choose the easiest choice. Having several hundred grand in the bank and not spending it is not the easiest choice. Just look at lottery winnners who go broke. I can’t remember the exact figures, but I think it’s something like 80%. While the theory of everybody becoming mustacian is amusing, the extreme discipline it takes is not something that you will find in the masses, and for that reason I do not believe this will ever be anything more than an amusing theoretical debate at best.

    • Andrew April 9, 2012, 11:05 am

      That leads to an idea of a new type of savings account (along the lines of a 401K): You can put tax-free money into it, but can only withdraw the *interest* without a penalty… and there are no age limits as to when you can withdraw!

      When you do withdraw interest, your withdrawal is taxed, so the government is happy. Of course, you could always move the money to a different account, just like you can roll over your 401K right now.

    • Mr. Frugal Toque April 9, 2012, 12:36 pm

      The people of our grandparents’ day were not any more intelligent than people are today. We have a much greater ability to educate than they ever did. We have a more stable food supply, cleaner air and a host of other advantages in raising our children that should make them as least as capable as their ancestors.
      So if the masses of people born in 1914 and 1921 were able to live frugal, sensible lives, we can learn to do the same.

      • mikeBOS April 9, 2012, 3:21 pm

        Well, but they did it because they had to in order to survive. If they’d had thousands in the bank, how many of them would still have had it just a few years later? I’m with BC on this one, most people just can’t handle the temptation.

        The stories of blown in inheritances and other windfalls makes me think frugality, FI and early retirement will always be reserved for a small percentage of the population. Frankly, I kind of like it that way. I mean, can you imagine if I had to put up with crowds at the beach on regular workdays? Yick.

        • Mr. Money Mustache April 9, 2012, 4:24 pm

          You’re right – most people wouldn’t currently be able to keep a good nest egg around without spending it. That’s why we’re teaching them to do so!

          Note that the post is called “what if everyone became frugal”, as opposed to “what if everyone got a sudden inheritance”. By learning to save up your OWN money in the name of financial independence, you also learn not to go out and blow it.

          Whenever I get cash windfalls these days, I’m excited only to get it productively invested as quickly as possible. That stuff is like a hot potato and I can’t hold onto it for very long, since I’m so anxious to put it to work!

          • mikeBOS April 9, 2012, 4:41 pm

            I suppose I just think they’re unteachable.

            • IAmNotABartender March 18, 2015, 9:31 pm

              I think many people just don’t know. I was a proud consumer just last year, but I was unhappy because I had to work. Finding MMM is what taught me that there was a different way, and it didn’t take long to realize that the sacrifices required are really quite minor.

              But I needed someone to explain it to me.

        • Mr. Frugal Toque April 9, 2012, 6:24 pm

          When my grandfather died from working as an air filter in a factory, (years before I was born), my grandmother was given a choice between a lump sum payout and a pension. She chose the pension. Not everyone did the same, though I think most did.
          Based on all of the first generation immigrants in my family who passed away in their 90s after a long and comfortable retirement, my estimation is that those people were pretty wise.
          Some of this, of course, is related to the unions to which they belonged, forcing them to save but putting that aside, my grandmothers couldn’t fathom borrowing money to purchase a vehicle.
          That’s just ridiculous, no matter what decade you were born in.

          • Joe Average February 4, 2015, 2:18 pm

            Pensions are great until the managers embezzle the money either directly or indirectly (runt he business into the ground). That’s what happened to my grandfather years ago. That’s what happened to my friend a few years ago. Here investments tanked and she could not retire for years which seriously hindered the advancement of those people below her on the career ladder.

            I would agree a long term payout is best but – BUT – there are risks.

  • Dollar D @ The Dollar Disciple April 9, 2012, 9:19 am

    Not to mention the fact that our current track of mindless consumption is unsustainable. There’s no way that all 7+ billion people on earth could live like the typical middle class westerner. As these extra 6.7 billion start to approach our “standard of living” there’s going to be a huge pressure exerted on our natural resources to keep up with the demand. Something has to give.

    • Zinnie April 9, 2012, 10:39 am

      This is what I imagine will be the catalyst for the ideal society MMM describes above. Not a revolution in the way people see things, but necessity.

  • Rayuka April 9, 2012, 9:45 am

    Exponential growth and consumption cannot exist in a finite system. This is the only bottom line that we need to understand. Those that can come to terms with what “enough” is in their lives, can begin to transition to a lower energy/ resource intensive lifestyle. This can happen now by choice, or in the near future, by necessity. Thanks for the blog MMM.

    • Ellie April 9, 2012, 6:06 pm

      Best comment on the page. I think some sort of compulsory (or at least incentivised, tax cut etc) contraception for all females under 25 should be happening sooner than anyone thinks… My friends all gasp when I say this, but I wonder if the MMM community are slightly more realistic in their view of the world?

      • Bakari April 9, 2012, 6:24 pm

        Why stop at 25?
        If there were a method which had no side-effects and was reversible, make it automatic for everyone (of both genders) unless an individual makes a conscious deliberate choice to go to the doctor and become fertile.
        Nearly half of all pregnancies are unplanned, this would reduce that rate to zero (and as a bonus, end the abortion debate!)

      • Joe Average February 4, 2015, 2:22 pm

        No, I get you. I think the gov’t ought to offer reduced cost or free permanent tube tying or vasectomy to anyone below a certain income level. They could take it out of a person’s future tax refunds.

        Side effects may include a lonely old age and more reliance on retirement homes b/c there is nobody to take care of you in your old age.

        • Lennier December 5, 2015, 4:45 am

          India already does this. If you get a vasectomy, you get a TV.

          Also, having kids is no guarantee they’ll be there to care for you in old age.

          • Matt (Semper Fi) August 1, 2016, 12:12 am

            I have a handful of brothers and sisters (in their 30s and 40s) STILL being taken care of by my old-aged parents! Ridiculous, I say.

  • nd April 9, 2012, 9:52 am

    You might enjoy John Maynard Keynes essay “Economic Possibilities for our Grandchildren”, written in 1930 about what life would be like in 2030 when per capital GDP had risen by almost a factor of 8. He conjectures about how a society can manage itself when it only takes 3 hours of work a day to meet your economic needs. You can find it here: http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

    • DaftShadow April 10, 2012, 4:38 am

      I don’t know about anyone else, but *I* sure enjoyed that essay. Thank you so much for linking to it.

      The problem with Keynes’ prediction is not that it’s wrong (standard of living and per capita production DO increase), but that it ignores the human drive for “more.”

      Yes, we *could* satisfy ourselves with a comfortable living produced by a couple hours of work every week, but people don’t want to scrape by… they want more security, more experience, more possibility. So, the gentlemen working three hours decides he will struggle and work 10 hours. He keeps doing it and gets fantastically more than his neighbors. So he continues this and goes to 20 hours. People see what he’s doing, and they decide to also try 10, 20, even 30 hours… This causes an interesting thing to occur: more of the resources are going to a smaller population, leaving “less” for the rest. So the rest have to decide a better way to get their resources. They start working 20-30-40 hours. And in order to survive, you have to keep up with everyone.

      I’m a big proponent of technology and watch with interest the next 50 years of change… but I’m not yet convinced that any of them will successfully cause a societal shift such that we stop needing human labor. Even with the addition of nanotech or similar… someone will still need to program and design the code. Perhaps if we build conscious AI, but I’m not betting on it anytime soon. And as long as human labor is required or capable of making our individual lives “richer”, “safer”, “more secure”, I suspect that the habits of hard work and relatively long hours will continue to remain with our society.

      ~ DaftShadow

      • Mr. Money Mustache April 10, 2012, 7:02 am

        Daft Shadow – and Thank goodness for it.. I believe the human brain NEEDs hard work to maintain happiness and balance. I’m not proposing we work much less vigorously.

        Just that instead of squandering the proceeds of our hard work on Cadillacs and other things that don’t improve our lives at all, we invest them in financial independence, so we can then continue to work hard on things that matter more to us – some of them unpaid, like raising our kids and helping society.

      • Value Indexer April 10, 2012, 7:05 am

        I found it very interesting too. However our “capita” keeps increasing – something Keynes specifically mentions as an exception to what he’s talking about (which is 3 hours per day, not per week). So we might be more than 20 years off.

        Although people who choose to work more could drive up prices (see: the housing market), it’s also possible that those people would be distracted buying silly things (see: hummers) and wouldn’t be able to drive up the prices of actual necessities because they could barely afford those. Or they might choose to invest more as MMM points out and thus not need to overpay for things. Or there might be enough overproduction of basic necessities that it’s not possible to drive the price up because you would actually die trying to eat that much.

        There is little doubt the productivity improvements will continue, and unless we manage to spread them even thinner over more people that should allow for more Mustachians. Even if you chose to be the one programmer who runs the world that should pay pretty well and allow for a short work time.

      • Squire April 12, 2012, 11:31 am

        OMG! If nanobots took over the human labor and everyone could work less, then we’d have to solve the over-consumption problems generated by nanobots! One enterprising young nanobot would have to create a personal finance blog for nanobots – Mr. Money Nanostache! Now this debate seems so small in comparison to a world of nanobot over-consumption.

  • Praxis April 9, 2012, 10:01 am

    “What is the engine of growth, then? It is the savers and investors. ”

    I dunno; ‘trickle-down economics’ haven’t worked out all that great. Thing about this is, it’s the consumers that drive profits to the investors. There needs to be a balance, the way the current economy works; too many consumers and not enough investors, and you have a debt crisis. Too many investors and not enough consumers, and the returns break down or the money gets funneled in to a small set of hands and locked up. You need both to run (again, the way our current society works) or things clog up.

    I think a frugal society would, on a whole, perform better for the people living in it in many ways. You’d end up with a lot less inequality and a lot more *savings*…which can be reinvested in aid or social programs. But the problem, I think, would be technological advancement.

    Right now, consumers subsidize technological advancement. Imagine a society where the latest and greatest graphics cards aren’t in demand. NVidia and ATi spend a ton of money to produce these cards, knowing they can sell them for exorbitant prices after launch to make the money back and the prices’ll eventually trickle down as they recoup the initial investment. The same goes for most technological growth today. Processors, hard drives, almost every computer component gets its R&D and production costs subsidized by the fact that people want the latest and greatest.

    Take that out, and companies will only go through product upgrades when they can leapfrog the competition because the incremental upgrades will be cost-prohibitive (won’t spike demand enough compared to the costs of producing). Product lines will be vastly reduced in scope (it’s expensive to have 40 different flavors of the same thing! The Ford Model T had the right idea, as does Apple actually), and while that’s not necessarily a bad thing, it removes a degree of “experimentation” companies do.

    I think technological advancement would slow down significantly in a frugal society. However, overall quality of life, stress, and problems such as pollution, and resource drain would significantly improve over their current situation. And you’re right that we’d still see entrepreneurs, maybe more; people could take more risks if they’re not always in debt.

    • Mr. Money Mustache April 9, 2012, 4:31 pm

      Well thought-out, Praxis!

      I agree that technological advancement would slow down in many areas in a low-consumption society. Luckily, we’ve already got more than enough shit invented to allow us to lead happy lives, as we have for many decades (although I am quite thankful for the Internet showing up not much more than 20 years ago).

      Another note: I do think that even as we decrease our splending on junk, we should increase our spending on things like energy: by wasting less electricity, we could all switch to 100% rooftop solar while keeping our energy bills roughly the same. That would drastically increase innovation in the solar and other alternative energy industries.

      Final note: For now, I’m not even proposing incredibly low consumption. Just a drop to less than $1000/month/person. Many people already spend much less than this. Only the rich people would really need to change very much.

      There would still be economic growth as developing countries scale their own spending up towards this level. But we’d have a nice model ready for them by the time they get there, with do-it-yourself home solar energy kits available for export from our factories, rather than only Mercedes and iPads.

      • DiggingForDividends April 16, 2012, 12:05 am

        “Productivity is the ability to get more with less effort.” You could break this down a little further and say efficiency is equal to output/input. One of the key ingredients in the vast majority of consumer products is oil. As most of us know, one of the easiest ways to cut our spending is to reduce the amount we drive, or use less oil. If we shifted from oil to renewables (yes please) we would be moving from one of the most productive (or efficient) energy resources available (not to mention the source by far and away with the highest energy density) to far less productive, albeit sustainable, sources. In theory moving towards renewables such as solar would greatly decrease our productivity.

        It’s an interesting trade-off, and one that HAS to be made, but similar to what you suggest above moving away from oil (consumption) to renewables (frugality) would certainly lead to a temporary depression.

        Please don’t mistake this as a pro oil or pro consumption rant, I’m a huge proponent of renewables but as all Ontario-ites are slowly discovering it’s a massive trade off.

        • Value Indexer April 16, 2012, 9:59 am

          That’s a good point (until renewables become more efficient than oil extraction). But if dropping oil is an inflationary move, and increasing frugality is a deflationary move, then one answer to the question of what we’ll do if we don’t shop so much is to use more human labor making the few things we do buy. Of course there’s no guarantee that it would be an even balance or a smooth transition.

        • Mr. Money Mustache April 16, 2012, 10:52 am

          True, true.. but we’re already getting quite close to the crossover point where renewable power becomes cheaper than oil for certain uses. Solar panels, even at today’s prices and without subsidies, provide some pretty cheap electricity – cheaper than grid power in some US states. Wind power is even cheaper on a capital-investment vs. kWh output basis. Crop-based biodiesel from oily low-maintenance weed grains and even algae is moving along pretty quickly (I think I saw an interview with Vinod Khosla saying it was already down to $5/gallon even in its current start-up phase).

          The point is that I’m personally betting that we’ll continue to have cheap energy for a long time. The switch to renewable energy might will probably be a net producer of jobs and economic growth, rather than a destroyer. Even if we spend more on it for a few decades, we’ll just be sucking our economic output away from the current destination (consumption), and into capital formation instead (new energy factories). That makes us wealthier as a society in the long run – a win!

    • Lennier December 5, 2015, 5:00 am

      “(it’s expensive to have 40 different flavors of the same thing! The Ford Model T had the right idea, as does Apple actually)”

      There’s some evidence that the sheere volume of choice is actually making consumers unhappy.
      I look at my work: do we actually need 32 different cans of corn? At least half of them are made by the same parent company, just under different brands.

  • Value Indexer April 9, 2012, 10:48 am

    Productivity is the ability to get more with less effort. We’re already much more productive than we were 100 years ago which is enabling more Mustachians. As it continues (and I believe it will), we will simply need less hours of work to get what we need to survive which means we don’t need to work as long. If there was perfect natural shelter and the food we needed grew reliably in public places (and enough of all of this for everyone), no one would need to have “retirement savings”.

    Now there are a couple of small flaws with this. One is that humans, like other animals, tend to expand their numbers until there isn’t enough to go around. The other is that people doing work and discovering new things for the pleasure and accomplishment probably don’t have quite the same push as someone working 80 hours a week just to pay the bills.

    Both of these have likely accelerated the rate of productivity improvements in the past. Without them it would still happen, just more slowly and in a different form (and we would survive without ipads and many generations did).

    On the other hand there are plenty of needs that aren’t met now because we’re too busy running around doing silly stuff, so who knows? It will be fun to see what happens when more people wake up.

  • Joy April 9, 2012, 1:04 pm

    In the above comment by Jason R, I disagree.

    MMM is about much more than you state in your 1,2,3’s etc..

    This blog is hot because we want to talk/read about these issues until
    they become a part of us. Much like the food on your plate, “staples” can
    be spiced up endlessly to your enjoyment.

    MMM is just that for me! An endless gourmet of frugal sustenance. :)

    • JasonR April 9, 2012, 2:42 pm

      Your staples are still your staples no matter how you cook them or what spices you put on them. It’s still rice with X, or lentils with Y, or staple Q with spice N. It is this simple (unless I’m missing the complexity somewhere?). We can argue over the trivial nuances but we all agree on the fundamentals. I like my rice with red curry, you like yours with green curry. Fine. We’re both still eating rice with curry. Now “how do I make green curry?” is much more useful to me than “let’s talk about the ephemeral poetic qualities of green curry for a few days”. Ok…sure…it’s green, it’s curry…and I want to learn how to make it so I can put it on my rice.

      There aren’t many here who think this is a bad idea or who don’t “get it”. We all do. So what much more am I missing? ERE has way more math involved than MMM and it’s still distillable to one sentence. All the implications are immediate. Reduced consumption. Self-reliance. Something else?

      Of course I could be over simplifying things. I’m sure someone will correct me.

      • Bakari April 9, 2012, 2:52 pm

        “There aren’t many here who think this is a bad idea or who don’t “get it”. We all do. ”

        see Cindy@Rhinebeck’s comments above.
        Or Sol (who is mustachian himself!) in this thread: http://www.mrmoneymustache.com/forum/ask-a-mustachian/is-mustachiansim-really-special/msg3181/#msg3181

        And then there are the people MMM paraphrased in the first paragraph of this post.
        Besides, not everyone who stumbles across this increasingly popular blog are already of like mind. If this movement ever does get big enough to be noticeable from the mainstream, you better believe the ensuing debate will center around the issues addressed in this post!

        • JasonR April 9, 2012, 3:33 pm

          ^ And here’s another guy with a brain full of practical knowledge. I hesitate to post a link to your RV video but everyone should see it. What you know about diesel engines/RVs/hyper-miling could fill a book. A book with hopefully very little theory and lots of useful tips. Didn’t you have a $4 electric bill one month? Revised by the power company to…was it $14? I can’t recall but it was still impressive.

          Wait, you have a blog now? Everyone can see it! Awesome.

          Yes, some don’t get it. Touche. But discussing it (online) won’t help the 97% of the people here who do get it. If this blog takes off then yes the wrath of the irrational masses will descend upon poor MMM. But since this is so simple to grasp there isn’t much else to say. People will come here and “get it” or they won’t “get it” and go rage against life. Besides, Kant’s Categorical Imperative doesn’t really hold water outside of thought experiments so we don’t even have to worry about this issue. See Milton Friedman or J.S. Mill.

          I think it’s more beneficial to write for the 97% who are on board then the loud, angry few who raise their tiny fists in defiance. Let them not get it. Meanwhile tell me how to convert my engine to run on their sweaty grease and tears of devastation.

          • Crazyworld April 9, 2012, 6:42 pm

            What if some of us “get it” all right, but…but….we are not interested or fulfilled by tinkering with our RVs/growing our garden etc? I for one grew up in a poor nation, though we were more middle class (by that standard). Frugal by necessity-clothes and dishes washed by hand, all meals cooked from scratch, clothes handed down, running water and constant power were not availaable 24/7, etc etc. well, i am not particularly interested in that drudgery, neither is anyone else i know who still lives there. The country has actually learned the american lesson of excess really well. And will get some hard knocks as a result within a few years.

          • Bakari April 9, 2012, 8:55 pm

            Thank you!
            hmm, well, among the knowledge in my head is plenty of economic and social theory (I got an associates in econ, knowing full well that I would never use it in any future job), so I find this stuff very interesting (as well as relevant).
            It turns out I had a misreading power meter!! Last bill I used 173kWh, still 1/5th the US average, but not as good as I thought when that video was shot :(
            I always had a blog, but I’ve just recently moved it to Blogger where its easier to read. But you won’t like it. Lots of social commentary and theory ;)

  • JP April 9, 2012, 1:19 pm

    It’ll be really interesting to see how things play out over the next few years, as the frugal/minimalistic crowd is definitely growing. I think that our overall quality of lives would improve greatly though if everyone did become frugal though. Our society has taught people to want endlessly, so they’ll never be happy with that mindset.

  • Cecile April 9, 2012, 1:51 pm

    Thanks for the great post, first I would say that I completely agree with you, but here are a few additional thoughts.

    1. Is the process going to be slow ? How slow ? Because I had the impression that we are running out of time here, with peak oil, etc etc. Shouldn’t we push for a faster move ? But I understand that paradigms are long to shift. This is what we are trying to do.

    2. Are people willingly going to change ? I mean, I understand we cannot force people to opt out of consumerism, but maybe we should try to “encourage” them. After all, mass media and advertisement are “encouraging” us to get into debt to buy shiny things we don’t need, so why couldn’t we do a similar frugality campaign ?

    3. This brings another question : some people make looooots of money selling things to people who can’t afford them, destroying the environment etc etc, are they going to let us be frugal ? What will happen when the movement gains enough momentum so that there are no longer 2mil visitors on your website but 10000mil ?

    Anyway, I am asking these questions because they rose during the French presidential election : only one candidate proposes to opt out of mass consumerism and re-focus on what we do best : education, innovation, and most important, he wants to shift our production efforts towards renewable energies and transportation. I know in the US you don’t really believe in government action, but this is not true in our small country ;-)
    The key point of his program is a so-called “green rule” : that by the end of its term France’s footprint would be brought back to 1 planet, thus cancelling our “ecological debt” (I am sure you are familiar with this idea that “if everyone would be consuming as many resources as X, we would need y amounts of planets to make it work”).

    I found this idea very interesting, and in the line of everything I have been reading so far on blogs like this one. What do you think about it ?

    • Mr. Money Mustache April 9, 2012, 3:38 pm

      Interesting points, Cecile.. just to be sassy, here are some ideas towards answering your points:

      1: How slow will the process be: it depends on how many of us get out there and start doing some persuading. And obviously, external factors like cost will have a big effect too. But far from being a deadline, any shortage of oil in the future would actually just be a big boost to changing our consumption patterns. The reason we do everything with motors right now (especially in the US) is because oil has traditionally been too cheap to care about. Any increase in oil prices will speed up change.

      2: Will people willingly change? I think if we educate them on the benefits of changing, rather than just punishing the consequences of not changing, we’ll have more success. As for your idea of a similar frugality campaign, see mrmoneymustache.com :-)

      3: Some people make loads of money from antifrugality, but they can’t stop us from changing. They can continue to advertise, and continue to fight for cheaper oil.. but they have no bottom-line lever to stop people from changing their values. But even it we change our values, there will still be money to be made from us. As noted in the article, we’ll probably spend more on other things that are important to us – renewable energy, healthier food, higher education, whatever. And remember, even the CEOs and marketers themselves are just people. They too can be converted to Mustachians.

      As for “What if there were more people visiting this website”, the only downfall I see is I’d have to pay a few hundred a month for webhosting, instead of the current $120/year :-)

      • Cecile April 9, 2012, 7:09 pm

        Thank you for answering, I thought that with the crisis, behaviors would change a lot more than they did. But you are right on this point : rising prices will definitely help us move forward…

    • Kathy P. April 9, 2012, 4:07 pm

      I would fall over in a dead faint if any US Presidential candidate suggested we rethink endless consumption! Holy cow! Then, after I regained consciousness, I’d go vote for him.

      Anyway, as much as we’d like to believe otherwise, people will only change their wasteful endless-growth lifestyles when the pain of NOT changing becomes greater than the pain of changing. Most people avoid change, it represents unknowns. I know for myself, I began working my way out of debt when it just became so obvious that it was limiting me and holding me back. Ironically, at that point, I thought I wanted to get out of debt so I could be free to buy stuff. I found myself saying, “Gee I could buy ___________ (fill in the blank) if I didn’t have to make the stupid credit card payment.” So I dug myself out of debt because the pain of the status quo had become greater than what I imagined it would be without the debt.

      Then, of course, the freedom of no debt made me not want to buy so much stuff after all. Go figure. I was so used to living on less when I was paying credit card bills, that after they were gone and I had all this left over money every month I was reluctant to spend it. I was afraid I’d go back to where I’d just come from. Then when my ancient avocado green ’70’s fridge died and I was able to pay CASH for a new one, it was a miracle!

      As MMM says, the rising price of gas will be a huge driver of this conversion to long-term common sense debt-free living. Given that it takes 10 calories of oil to produce 1 calorie of food, food costs will rise as well. When it becomes too painful, people will begin to look for solutions and this blog will be there for them. The 1% can’t stop it, no matter how much they’d like to.

      • Cecile April 9, 2012, 7:14 pm

        Thanks for your point of view !
        This candidate is not well-liked by the media, who appear to be doing anything they can to make him sound crazy and dangerous. But he is definitely gaining a lot of support. It is very interesting to see that he can get 120,000 people to show up at a meeting where he says that we are going to stop producing stuff we don’t need, that pollute a lot, and are often made in poor human conditions, and shift our production to cleaner energy, better food, and better knowledge of our environment. Maybe it’s a sign that people are getting ready to change habits.

        • Lennier December 5, 2015, 5:08 am

          #FeelTheBern :D

  • Bakari April 9, 2012, 2:16 pm

    Sol and I had a long discussion on this topic on the forum a little while back, starting with this post: http://www.mrmoneymustache.com/forum/ask-a-mustachian/is-mustachiansim-really-special/msg3181/#msg3181

    The summary is that increases in productivity no longer increase standard of living (of any except the most wealthy Americans), and as such, there is nothing good about continuing to expand the economy.

    We already have enough. And we have allowed a system to develop where any additional value that gets created all goes to the same top 0.01% of the population anyway.

    Due largely to
    1) automation and other increases in tech
    2) outsourcing
    3) corporate consolidation
    the price of labor / productivity per worker has increased somewhere on the order of twenty fold over the last century, while inflation adjusted median income has increased 7 fold. The difference is what explains our wealth inequality.
    If everyone opted out of the consumer rat race, there would be a labor shortage which would drive wages higher, allowing the middle class to reclaim that lost value which belonged to them all along.

    Each worker puts in 40 hours a week, 48 weeks per year, for about 40 years = 76,800 hours.

    One person can accomplish in 2 hours what would have taken 40 hours in 1900.
    But our productivity per person has increased 20 fold since 1900, when the 40 hour work week was being created.
    Accounting for increased productivity, we only need 3,840 hours per person of lifetime work. And given our standardized work week, that only amounts to 2 years per person of full time work (or 2 hour work weeks for 40 years), to create the same level of total national wealth.

    This is perhaps an extreme example – we might be more comfortable with the standard of living of the 1950s than the 1900s. But given that the standard of living hasn’t actually improved for most American’s since the 1950s, there is no advantage to having a total productivity any higher than that.

    It isn’t by accident that the myth arose that consumer consumption benefits the middle class. It was propaganda begun by marketing firms employed by corporations. A very interesting (and somewhat disturbing) documentary on the history of this was made by the BBC, and you can watch it for free here: http://www.sprword.com/videos/centuryoftheself/

  • Chris April 9, 2012, 7:32 pm

    This will never happen (everyone becoming frugal). I used to worry about telling too many people how great it was to live in Alaska for fear more people would spread the word and move there. Then one day I realized it takes a lot of character and tenacity to up and move to Alaska, and even more to stay there for an extended period. Frugality is the same, very few will ever have the depth of character or tenacity to live this lifestyle. Most will run the hampster wheel their entire lives and never think to look outside the cave they’re stuck in. Even worse, when offered a way out of the rat race, most will scoff at it as insanity.

  • Mark April 9, 2012, 8:14 pm


    Long ago, we made a choice: either work the same and consume more (invent marketing to create needs for all the extra produced stuff) OR work less and consume the same.

    We should have choose the second option!

    Just think how wonderful life would be if you could work less and spend more time on the things that you enjoy or with the people you enjoy.

    So much of our lives is about work and consuming things we don’t need. We never get time for the things that we don’t even know exist because we are not out there learning/developing/meeting day dreaming!

  • Rich M. April 9, 2012, 9:50 pm

    If everyone became frugal, we would violate entropy, rising expectations and we could have world peace too. It’s a Nobel idea, but hard to imagine the dream realized…..and I feel like I’m an optimist.

    It’s the prisoners dilemma. ( http://en.wikipedia.org/wiki/Prisoner%27s_dilemma ) If people did work together, we would be better off, but people work in their self interest.

    The forces of exponential growth and limited resources do not mix. See Al Bartlett videos for more info….You have the skills, do the search.

    It’s basic physics and evolution knew that long before humans ever existed. Our genes force us to compete and the more the population grows and the resources deplete, the more we work to get them.

    It’s a hard force to resist. Us lucky frugal people did well and can resist but the majority can’t. You can even see an example in the recent lottery craze. Greed and need is there and people will gamble a lot for any chance to get ahead.

    Gedanken experiments don’t always work.

    Perhaps if we only worked 10 hours a week we could survive with out awesome productivity, but we would still have to work till were are 80 since there would be no fund built up to retire. The young folk would get this idea to work more hours and save, thus putting the equilibrium back to probably where it is now.

    Imagine MMM, if you worked ten hours a week during your huge money making binge. How much would you have saved by now?

    • Mr. Frugal Toque April 10, 2012, 10:35 am

      While I agree with you that the Prisoner’s dilemma is an appropriate metaphor for communal frugality, it’s only fair to point out that you win the Prisoner’s dilemma by playing in rounds and remembering what the other guy did the last time.
      This is actually explained in the Wikipedia link.
      As well, please don’t incorporate evolution into your explanation for why people can’t get along. “Our genes” are much more complicated than what you’ve stated. Even a cursory examination of other mammals shows that reciprocal altruism, herd mentality and a host of other cooperative behaviours are clearly rewarded in nature.
      What we’re talking about here is teaching people that consumption isn’t making them happy and that learning to appreciate what they have *will* make them happy.
      This will lower consumption rates and ultimately make the world a better and happier place.

  • Petey C April 9, 2012, 11:51 pm

    What’s interesting about this post is that actually, what we typically call ‘frugality’ is only frugal from the point of view of an overconsuming society. The overconsuming society is where people allocate a LOT of goods/services into trying to achieve happiness, but they just never quite achieve that happiness. I think that in classical economics, that is simply a misallocation of resources.

    What MMM talks about is allocation of money to those things that ACTUALLY make you and others around you happy. If you earn $5000/mo but only need $1000/mo to be reasonably happy, that other $4000/mo doesn’t disappear. And if you retire at 35, all the activities you do with your life for the following 40 years are not pointless.

    A Mustachian possesses a whole truckload of extra money and labour (their own labour) to spend on different things. I noticed from MMM’s budget that he’s pretty generous to charity and it sounds like he puts a lot of his time into having fun with his kids (which is a really valuable economic activity) and improving property.

    The only difference between a Mustachian and a wageslave is that they are choosing to allocate their spending and their labour in different ways. If Mustachians’ way of allocating spending/labour is a more efficient producer of happiness (and I believe it is) then we will still have a thriving economy, and the free market will operate more efficiently to maximise happiness. You’d probably have a big rise in ‘volunteers’ (who are just rational consumers who choose to spend their labour resource on creating an increase in happiness in the world).

  • Jackson April 10, 2012, 12:50 am

    Sometimes, I wonder about how much time, energy, money, and resources are wasted creating, marketing, shipping, and storing children’s toys. All of that energy could instead be used for space exploration or something as good or better.

    • Gerard June 18, 2012, 8:54 am

      I wonder about all the resources wasted on space exploration that could be spent on children’s toys! :-)

  • Catalana April 10, 2012, 2:51 am

    Hmmmmmm I disagree.

    I disagree that people would work less if everyone became frugal. Bear with me while I formulate what I am thinking…..

    At the moment there is a certain amount of capital available, from mostly institutional investors, but also us frugal types. If society was to turn on it’s head and everyone became frugal (and attempted not to work) there would be a much greater stock of capital, and vastly fewer workers.

    As a result, costs of materials and labour would rise, and anyone working would earn an exponentially higher wage. Returns on capital would be much lower than they are at present. The impact on those trying to reach financial independence would be to make the “number” (on which you could retire) much higher. People would have to work for longer, etc etc and eventually reduce the number of people who could feasibly quit working back to a similar level to what it is now.

    This has effectively already happened to some extent, with population growth being predominantly in the retired age bracket. Compared to two generations ago, we already have a much larger non-working (retired) population which is pushing capital into the system, via those institutional investors I mentioned earlier.


    I suppose what I am saying is everyone is ALREADY working less, as a proportion of their lives than my great-grandparents generation. Without early retirement I should work for an estimated 52% of my life. My great-grandmother worked closer to 70% of her life span. She might have retired early, but she started full time work at 15 years old and had a life expectancy some 20 years shorter than mine.

    A non-working lifestyle is simply unattainable by a majority.

  • Heather A April 10, 2012, 5:48 am

    In these monkeys, social status is a non-trivial influence on their physiology.
    If social status is this important to people as well, Is it a surprise then, that people are driven to demonstrate their success to others in visible ways?

    For the frugtopian society to develop, there needs to be another way for people to visibly show off their success. If not expensive cars and mcMansions, then what will it be?

    Putting a sticker on your window saying you use Bullfrog Power works for some, but what about those who “need” that shiny black F150 which you can hear from 3 blocks away? (I wish they would just cease to exist, but we seem to be stuck with them). What will they do to assert their whatever-it-is they are asserting?

    • Mr. Money Mustache April 10, 2012, 6:56 am

      Very Interesting point and link, Heather!

      In fact, I was thinking about the same concept when I declared that Frugality is, in fact, the New Fanciness http://www.mrmoneymustache.com/2012/03/07/frugality-the-new-fanciness/

      Soon enough, it will be an enormous social embarrassment to be seen driving a pickup truck, unless it’s an old long-bed small-cab model that is completely filled with tools and materials. The new way to show your social status will be a combination of the efficiency and the creative flair of your lifestyle.

      We just have to be patient while the rest of the world slowly catches on – after all, that article was only published 33 days ago :-)

      On a slightly more scientific note: the benefits of social status come mostly from what you perceive your social status to be, right? Even now in the early stages of the revolution, I feel great status from living a modest lifestyle, especially the biking part. When I’m the only person locking my bike up to a tree in the big-box store parking lot because they don’t even have a bike rack, I feel more prestige than I could have felt showing up in a chauffeured stretch Bentley limousine. Because of the way I perceive things, I’m getting all the benefits of the social status already. My physiology seems to agree too.

      • Heather April 10, 2012, 7:55 am

        I agree. You and I feel that we gain status by being less consumeristic. (as evidenced by the fact that I realized that I was actually embarassed that my kid’s favorite jacket has a huge Reebok logo on the front. Honest, I got it with a collection of great used clothes, and it is exactly the right weight for the weather. I put quite a bit of thought into the feasibility of cutting off the logo with an exacto knife, or modifying it with black marker so it said “Beebop”. )

        I think we were lucky enough to be born with a gene, or given an upbringing that places a positive value on not following the herd. It feels like a sort of stubborn rebelliousness that makes us feel confined if we are behaving the same way as everyone else, when there are other glittering possibilities out there. It seems though, that many people feel a great uncertainty at taking even a single step off of the beaten path. They need many voices of reassurance, and many advertisements telling them what is socially acceptable.
        This MMM Blog can help those who are on the edge, and just need a few more voices to give them confidence.

        • GrandpaMM April 10, 2012, 8:46 am

          Heather, we must have similar DNA! Even at my advanced age (69 in a few days) I still refuse to buy garments with overly blatant logos. If given such an abomination, I blacken or cut off the logo.

          Brandless, I strut proudly down the street.

          Today’s post and all these interesting responses are collectively a wonderful achievement and a meaningful contribution to planetary sanity.

          Congrats everyone, philosophers and make-me-a-plumber exhorters alike!

          • Mr. Money Mustache April 10, 2012, 9:26 am

            Haha.. very funny Grandpa MM and welcome to the conversation. I feel sorry for any naysaying commenters who might dare to question frugality now, with so many hardcore Mustachians PLUS three members of the actual Money Mustache Family now hanging around here, arms folded and ready to pounce on the keyboard.

  • Patrick April 10, 2012, 6:05 am

    Love the post…and agree completely. I’m a mathematician/economist, and found it funny that economics professor Steven Landsburg covers the exact same topic in his blog today. http://www.thebigquestions.com/2012/04/10/the-path-to-prosperity/

    I don’t think many economists would disagree with this point. Even Paul Krugman, who advocates spending to increase prosperity, advocates spending on *capital*…not on luxuries.

    • Geraldine March 28, 2015, 6:30 pm

      Hmm, think you omitted the most important sentence in the post:
      “To move up this ladder, you need to do more than just accumulate capital — you’ve got to be the sort of country where capital is worth accumulating.”
      If capital was the sole lacking factor for development and growth, as was assumed in the 60ies, then development aid would have solved the problem long ago, but it hasn’t, to the contrary.

      The discussion about the effect of an allcompassing frugality is surely interesting, but pointless. The effect of a severe increase in average saving rates on an economy will depend on so many factors that the answer surely is not as straightforward as many here claim. Again, economies are very complex systems and it is generally very difficult to predict the effects of fundamental changes in economic variables.

  • a1travis April 10, 2012, 7:04 am

    Great article! I’m loving the comments as well. I’m going to play out the Devil’s advocate scenario to the proposition, “What If Everyone Became Frugal”, just for fun…

    It’s an interesting idea and you could probably write a bestselling fiction book about it; although, it’s not realistic. Don’t get me wrong, it would be awesome if everyone became frugal because the result would be a more sustainable planet (with human life on it), less environmental destruction and less mindless consumption of meaningless crap. I contend that we would all be a lot happier as well. Scandinavian countries generally rate high on the happiness scale (much higher than the U.S.) and have much more equality (and frugality) built into their economic frameworks, as shown by the Gini coefficient. But, good ol’ ‘Merican capitalism has a problem with this idea. For the rich to get richer and inequality to continue, they need many sheeple to buy in to the superficial debt-slave model.

    Let’s say a Mustachian consumes 5-25% of what an average American consumer consumes. But, could this idea be fully realized in the capitalism framework? What if we the people stage a coup d’état and perform a reverse-Atlas-Shrugged on the system? We refuse to buy new cars, fancy homes, iPads, luxury goods, name brands, Starbucks coffee, boats, and other wasteful, unnecessary things ad infinitum. We quit going out to the movies, washing our cars at the expensive car wash, and quit getting a hair cut every month (instead quarterly will do). We downsize to the point that everyone is living in 900 sq. ft. homes (or less). Just as the goods market diminishes and many companies and jobs evaporate (unable to survive without “business”), so does the service/entertainment market. Unable to pay their loans, businesses and employees start to default. Banks collapse, inventories surge (nobody wants this stuff anymore… you can’t give it away), prices plummet, stocks fall, unemployment skyrockets (for awhile during the transition). If 70% of the U.S. economy is generated from consumer spending, I think our current economy would collapse (which might not be a bad thing in the long run)! I’m not an economist, but I think most economists would agree with the math on this one.

    But, wouldn’t collapse of our current system as we know it, replaced by a more evolved uber-frugal system, be much better? More streamlined? More efficient? More sustainable? And lead to happier people overall? We would enter “The Great Reset”… a deflationary spiral and quite possibly a depression much greater than the Great Depression would be part of the transition as underconsumption gives way to crisis theory, but ultimately things would be better, no? After all, stuff doesn’t really matter. You aren’t your khakis. So let’s play this card. Join together and refuse to spend! If only it were that easy. Of course this whole scenario is idealistic and unrealistic… greed and power aren’t going away any time soon… energy isn’t created or destroyed, just converted. Our prosperity generally comes at the expense of the natural resources of our planet and the slaves that continue to be employed for the rich and powerful to get what they want, while fooling us (the consumers) into thinking we “need” lots of shiny things to be happy. Everyone won’t become frugal, but at least readers of this great blog can buck the system and make a better life for themselves, within the framework of a system that’s inherently corrupt and built upon exploitation, by becoming awakened to the ruse and realizing what’s really important in life.

    • Kathy P. April 10, 2012, 10:14 am

      Hmmm…your collapse scenario sounds exactly like what many Peak Oil and other resource depletion “doomers” predict as an inevitability in the not-so-distant future.

      I’ve really enjoyed reading all the comments, but only a few have touched upon the fact that we’re living on a finite planet and seriously bumping up against its limits. Discussing Mustachian frugality as if it will always be as optional as it is now may be a moot point, yes?

      When reality finally hits home (how long will that take?), downsizing our wasteful lifestyles will, I think, become the new normal. Cheap oil fuels life as we’ve known it and that appears to be about over.

      • a1travis April 10, 2012, 10:35 am


    • rjack April 10, 2012, 11:21 am

      I think that increased frugality and reduced consumption are inevitable in most of the industrialized world.

      The only question is whether we will have a Soft Landing or Hard Landing. If frugality becomes the New Fancy or at least the social norm, then we will have a slow, Soft Landing. If frugality doesn’t happen until resources are depleted, then we will have a fast, Hard Landing.

      I’m hoping that this blogs and others like it help create a Soft Landing by slowly building a grass roots movement. Maybe I’m an optimist. :)

    • alicia April 16, 2012, 6:08 pm

      Ah! The Great Depression. If ever there were a perfect 100% pure frugal lifestyle example, the Great Depression would be it. Didn’t everyone look happy? They were all living frugally. Only using what they needed. Only buying what they could afford/wanted. Reusing, recycling, rethinking. Houses were small, meals were smaller, no spending equaled no jobs, no money, no savings, no inventions, no prosperity, everyone was on the same wave length. Ah! The good old days.

      If everyone were to go frugal today, we’d have the Good Ole’ Great Depression back in a matter of months. Or as I see it right now, three years. Without the government handouts our broker-than-broke $17trillions-in-debt Uncle Sam is dispersing, I’d say we’re probably knee deep in a Great Depression right now.

      Don’t worry. World War Two came along, and the GB was lifted. Everyone, including women, went to work, became productive, made money, bought things, got bigger houses, bigger meals, better clothes, bigger cars, appliances and voila’ the GB was over.

      Imagine that? How awful. According to you, the GB was a very good thing. All ten years of it. Just look at the photos of the GB. Doesn’t everyone look happy, rested, well fed, clothed, housed, etc. etc. etc.

      If everyone in the world were to become frugal, we’d all become mired in the greatest Great Depression mother of all time! How foolish. Without the human desire to create wealth, discover new lands, new products, new things, Christopher Columbus would have stayed in Spain and the world as we know it today would still be flat. Why do you think he traveled to find new lands? For humanity? Or perhaps gold, wealth and the human desire to succeed and conquer?

      You can not change human nature. Nor can you imagine other wise. To do so would put you, and your thoughts, on par and equal to that of Adolph Hitler and the Nazi’s as they tried to take over the world and create the perfect race. Frugalistas? Nazi’s? Tell me what’s so different.

      • Mr. Money Mustache April 16, 2012, 7:45 pm

        Whoa.. unfortunately, it looks like you have misunderstood pretty much the entire article. Maybe you just read the title before angrily starting to craft this long and dramatic response?

        Have you even read the other posts on this blog? And are you even aware of the actual economic causes of the great depression? One book that explains it pretty nicely is “Towards Rational Exuberance” in the recommendations/books section on the menu above.

        • Jimbo April 16, 2012, 9:18 pm

          Holy Molly Alicia! That was hilarious!!

          Promoting frugality = on par with Adolf Hitler….

          My mind is blown!

          • Kaizen77 June 9, 2014, 7:42 am

            Godwin’s Law!! Godwin’s law – Wikipedia, the free encyclopedia

      • Matt (Semper Fi) August 1, 2016, 12:25 am

        Cindy? Is that you? You registered under a new name and came back with more of your vitriole! Why do people have to be haters?

  • Kathy P. April 10, 2012, 11:23 am

    Just ran across this: http://www.cnn.com/2012/04/08/opinion/gilding-earth-limits/index.html?iref=obnetwork

    “Even the previous heresy, that economic growth has limits, is on the table. Belief in infinite growth on a finite planet was always irrational, but it is the nature of denial to ignore hard evidence. Now denial is evaporating, even in the financial markets. As influential fund manager Jeremy Grantham of GMO says: “The fact is that no compound growth is sustainable. If we maintain our desperate focus on growth, we will run out of everything and crash.” Or as peak oil expert Richard Heinberg argues, we are moving beyond peak oil and into ‘peak everything.'”

    I think at some level, vast numbers of people – more than we realize – get that things are different this time. Witness the growing interest in gardening, urban homesteading, living mortgage-free in a tiny house on wheels. It may not be Mustachian frugality exactly, but these are ways that many are trying to come to grips with the permanent changes they sense are coming.

  • GregK April 10, 2012, 11:28 am

    MMM, if you’ve never heard of the Solow (or Solow-Swan) Growth Model in economics, I suggest looking it up. You’re describing it in your article.

    The Solow-Swan growth model has the savings rate as a key determinant of an economy’s equilibrium size. If the savings rate is high, the economy will have a large capital stock and a high level of output. If the savings rate is low, the economy will have a small capital stock and a low level of output. Therefore, if you raise the savings rate, you will boost economic growth, but only temporarily, as the economy reaches a new, higher, steady state. If you’ve got a steady increase in the savings rate over time, that might indeed be even better, not only for the reasons you suggest, but also since you’ll be slowly moving the steady state upward, which will continue to pull the growth rate higher.

  • lurker April 10, 2012, 2:28 pm

    where I sit at this awesome table of wise people: we can choose frugality and the punch happy MMM way or Nature (remember that wonderful post?) will force frugality upon us. hey MMM better start planning your garden and learning about permaculture because I reckon they truck a lot of your food up there to Colorado and if the peak oil folks are even half right food from California could get very pricey in the not to distant future. I must say I am totally impressed with the level of discussion here and the civility between exchangers…gives me a bit of hope after all for our super successful but sometimes sadly short-sighted species.

  • JeffT April 10, 2012, 4:51 pm

    One great side effect of huge numbers of people choosing to be frugal is that those without a “normal” amount of resources who need to focus their limited resources on education and training will see a different model that doesn’t involve squandering those limited resources on unnecessary consumer goods.

  • George April 10, 2012, 10:56 pm

    Donnnn’t worryyy …. It will never happen, for every mustache (or like minded saver) there are 10, no 15 spenders; seems people just don’t like to sacrifice or delay gratification too much.

    Beside if everyone were a mr. money mustache, you would no longer get any “social life credit” for being special for retiring early or having a large cushion of cash (after all so would everyone else!!)

    And no of course the economy would not crash, it certain would change (lenders of all sorts would go out of business, i.e. credit card companies, also probably some high end luxury automobile makers would be gone), but the economy would then fixed itself by having new businesses created after the lenders are gone.

    I think the sense of community would be stronger if everyone were MMMs because they would have more time to talk to one another and participate in more civic duties (i.e. volunteering or politics)

  • Stephanie April 11, 2012, 12:47 am

    Great discussion. Just finished catching up on the entire MMM archive. Holy Smokes Batman! That is a lot of reading. Very educational. Thank you Mr. & Mrs. MMM.

    The current discussion made me think of a book by James P. Hogan called Voyage from Yesteryear. It tries to answer the question of what would humans do if we had unlimited resources and a break from the cultural norms we have inheirted. It made me think. I highly recommend it.

    It also mad me a little sad/mad/crazy. Because, the point I think we all miss from time to time, is we DO have all the resouces needed for a ‘good’ life for everyone…but then we have to question why we don’t care to share those resouces. And when we do share, why we don’t punish those who hoard those resources to the detriment of the others.

    I am putting my vote down for humanity works best in a tribal/local accountability mode. I am all for advancement and global cooperation with a great emphasis on being your brother’s (local pooh-bah’s) keeper. Anywho, thanks for the food for thought.

  • Hanne van Essen April 11, 2012, 3:35 am

    I do think that the world would be better off, when everybody would be frugal. For example I would be much happier in a world without ugly plastic Chinese toys that break within a day. But I also think it would then be harder to save up for early retirement. I do think that Moustachians benefit from the mindless spending of the majority. Stock prices go up because a lot of people want that IPad 3. I am not saying there are no other areas which are more durable, where money can also be made. But the spenders sure make it easy to save up. Just think of the prices of second-hand stuff.

  • lurker April 14, 2012, 8:50 am

    how about a guest permaculture post? folks might be turned on by this “frugal” and holistic and “natural” way of looking at resources and energy…..wish I were qualified to write one but I am a rookie on this fascinating topic.

  • G. Mustache April 15, 2012, 9:02 am

    Our Government gave us $300, then $600, and now reduced our Social Security Tax by 2% and told us to spend the money in order to boost the economy. How can you ignore your governments directive to spend, spend, spend for the good of the country, its your patriotic duty to spend!

    They should have told us to reduce our debt, a concept they do not understand, or increase savings.

    If the people spending more than they earned suddenly stopped overspending and actualy used some earnings to reduce their accumulated debt the economy would suffer. Politicians cannot let that happen.

    You people are on the right track, spend wisley, keep saving, invest in your future.

    The only downside to saving is inflation. If we have serious inflation big ticket items like cars and houses should be purchased early. So far inflation has been under control, we are close to deflation.

    (MMM note – I had to change your posting name to “G. Mustache” to avoid conflict with the existing MMM contributor known as “Grandpa Money Mustache”/”Grandpa MM”).

  • Ari April 24, 2012, 2:27 pm

    Mustache, great site, sorry to see you be so wrong in this last article.

    (1) Influx of capital is no guarantee of permanent economic gains.

    Refutation of your thinking is here right in the present — the housing sector collapse.

    There was trillions of capital that was pushed into the housing sector. There was temporary construction growth, a bubble, and then a collapse.

    Why did it collapse? Because there wasn’t enough demand (and consumer income) to sustain the growth.

    (2) there is no economy without consumers

    Productivity is not enough without consumers.

    As a thought experiment, consider productivity taken to the extreme: that no company actually needs employees or a workforce. What happens then? Who buys the goods and services at that point?

    The more money we push into the corporate sector, the more power it has over every aspect of our lives. Corporate mandate is to make profits for shareholders. Within the United States, we are witnessing a transfer of power from the volter to the shareholder/company owner in all matters that count. What you are naively advocating essentially is an acceleration of this trend.

    • Mr. Money Mustache April 24, 2012, 3:28 pm

      I dunno Ari, I think you just misunderstood what I was trying to claim. First of all, of course an influx of capital is not a guarantee of permanent gains – but only because nothing in economics is a guarantee of anything. On average, however, having a higher national savings rate will tend to increase capital investment as a whole.

      Regarding the housing boom/bust – you’re talking about a bubble in a specific sector. Bubbles happen all the time.. but the cause was not a higher national savings rate or even low interest rates. It was a bunch of stuff – low lending standards, silly securitization practices and irrationally high ratings of the resulting securities, a speculative mindset among the public and investors who believed house prices could only go up, a government that played along.. and more.

      You’re right that there is no economy without consumers. But I’m not proposing getting rid of consumers. There are billions of us, and we will always need to consume a shitload, even to sustain our basic needs.

      I’m proposing that we shift our consumption away from destructive and useless crap that has minimal side benefits to society (plastic cups, disposable gadgets, SUVs and gasoline, etc. and instead consume MORE of things that advance humanity’s capital stock while you consume them (education, renewable energy, ecosystem preservation, scientific knowledge, etc.). It’s still consumption, and it still generates jobs. But the side effects are better.

      I’m also not proposing shuffling more power into the corporate sector. By creating our savings domestically through reduced consumption and increased investing, we’ll simply providing the capital in a different way. Right now, we import a lot of our capital from foreign governments buying bonds, the Treasury printing money to keep interest rates low, etc. By increasing our own capital, we’d tend to displace these other sources of capital, which is also good as well.

      For all future dissenters to this article – remember that I am NOT proposing getting rid of the consumer! So no more criticisms with that as the basis!

  • Al April 27, 2012, 8:21 pm

    I think there’s a logical flaw in your thinking…

    The US govt has been pumping mad amounts of money into the economy for decades, and it hasn’t really made much of a difference to the economy, despite the availability of easy credit for businesses.

    (Credit is credit, whether it comes from ordinary people’s savings or from the govt printing paper.)

    Also, if I think of it in terms of my own situation, as a translator, I’m not going to upgrade my capital (computer etc.) if no one is buying my product (translation services in this case).

    It’s the same for businesses of all sizes. If people aren’t buying much of their stuff, they’re not going to buy new machinery etc., so even if credit is readily available (because of people saving), companies aren’t going to necessarily access it.

    • Mr. Money Mustache April 28, 2012, 7:03 am

      Hey Al,

      I can see how the economic concepts don’t always align with intuition on an individual scale, but this is solid economic theory we’re talking about, not just something I made up: investment DOES create more productivity in the economy as a whole.

      As for the US – “it hasn’t made much of a difference to the economy”? – Have you looked at a Real GDP chart recently?


      The US economy has grown like wild, almost relentlessly, for over a century. Right now, it’s about 2.5 times bigger than it was even in 1980, and that’s AFTER adjusting for inflation. This is the reason the cities are so enormous, the roads are so clogged, and the cars and gadgets are so shiny and advanced compared to the cigarettes and manual typewriters of 1980. That’s economic growth. It’s not always for the better, but it is definitely there.

      Regarding your translator example: there are ALWAYS companies and people buying something somewhere in the world. Not everyone is positioned to take advantage of it, but there is always someone who is. For example, let’s use one of my own activities: owning rental houses. The availability of cheap credit (3.x% mortgages, etc.) combined with strong demand for rental houses in my area is tempting me to purchase more capital stock (houses) and improve it as well (renovations) to offer it to my customers (tenants). It is thus increasing the availability of rental houses, which is one part of the economy that I represent.

      Meanwhile, by buying up houses, I am taking them off the market. This reduces the supply available for other landlords and owners, raising the prices. That increases the profitability of building new houses, and eventually the higher prices will lure house builders back into the market. They will in turn buy more materials and employ more people.

      The economy is always full of exceptions at the micro level, but zooming out to the macro level, the concepts of economics work surprisingly well. Sure, policymakers are occasionally blind to surprises, and irrational human nature also ensures bubbles and therefore busts, but as I’ve suggested elsewhere in this blog, if you study up on the craft it really helps the world make more sense.

      • JasonL April 1, 2015, 11:05 am


        Great blog! It has really helped me take my existing thoughts on the subject of early retirement that had been floating around in my head and integrate them into a coherent, workable whole.

        Now, regarding the above statement: “investment DOES create more productivity in the economy as a whole.”

        This is not universally true – PRODUCTIVE investment creates more productivity in the economy as a whole. There are such things as investments that destroy value, i.e. the cost exceeds the economic benefit. In those situations productivity can indeed go negative.

        For an example, take a look at China. They built entire cities that now stand empty, such as Ordos, which has received a lot of media attention.

  • Matija April 23, 2014, 4:33 pm

    Ari I’m sorry to see you so wrong in your comment. As Mr. Money Mustache explained influx of capital does not guarantee economic growth, but it is more likely than not that people will be able to make sound business decisions with it, thus ensure economic growth. For proof look at the whole human history.
    The housing sector collapsed because the government was foolishly enforcing bad business decisions (for their political benefit or because of their ignorance) upon financial sector which, obviously, resulted in losses of capital.

    I accept your thought experiment. If all businesses and factories would run without humans, let’s say they would be replaced by robots that would make all business decisions and all menial work… in the end humans would still have to make decisions on how many of factories to build, how big and where in which case human “labour” would be required.

    And if we think about actually getting to factories not employing people we have to assume all people are well off, living from their capital gains in which case all they have to do is consume.
    But in case some people still have to work to survive they are competing with the cost of running a robot. So the more productive the robot is, the more humans can be paid to work, because there is a sum of money that represents the cost of producing and running a new robot, materials, energy, programming and that cost sets how much you can pay for human work.

    So see, the end result of all people becoming frugal is that eventually all people would live of their capital gains, there would be no need to work and all we would do is consume from the profits of our capital gains.The more people would invest, more cheaper capital would be available on the market giving more oportunity for new products being developed and increasing productivity of working people, which would be paid more. The more they would earn, more they would save, more capital would be on the market. In the end all we would be doing is managing our capital, working on new ideas, products, servies and consuming.

  • Aaron June 3, 2014, 3:17 pm

    MMM, I love your blog, but I don’t see how Mustachianism is not fully dependent on the overspending of others. If everyone becomes frugal, then the economy will be forced to deflate to match lower demand. This means many business will have to either cut jobs or go under. Revenues will fall and investor confidence will wane, leading to capital losses for those who invest. This works out great for those who already have a pile of money, especially if they don’t have it heavily invested in the markets. But those who are just starting their Mustachian journey (or those who never started it) will be faced with loss of income (job loss and/or reduced hours) and loss of investment opportunity (loss of income + deflationary capital losses on investments). At the end of deflationary contraction of the economy it seems like everyone would be in the roughly same relative position financially, but the absolute position of the economy as a whole would be much lower.

    Now, if we could replace the lost internal demand with external (i.e. foreign) demand that would be one thing. But your post is about everyone (i.e. the whole world) becoming frugal, not just those in the US. Am I missing something?

    • Mr. Money Mustache June 3, 2014, 10:17 pm

      I think the key lies in this sentence you wrote: “the absolute position of the economy as a whole would be much lower.”

      Exactly! Lower production, which means fewer working hours per person and lower consumption. More leisure. It’s a win.

      The situation is entirely sustainable. The adjustment period could involve some whiny news headlines if we do it too fast. On the other hand, if Mustachianism spreads while hiding inside a gigantic economic boom (for example, right now), it might just take the form of a slower economic expansion that gradually tapers off instead of ending in the usual speculative crash.

      • Jon June 19, 2014, 3:20 pm

        Mr. Mustache,

        A thought for you to explore:

        The idea that you need savings in order to have investment is a fallacy in a large industrial economy. It was true, to some extent, in the 1800s. However, today, investment capital for large scale enterprises comes almost exclusively from bank loans. And bank loans are not from savings. When banks make a loan, they just create money out of thin air. The only purpose of bank deposits is to give people a low cost way of storing money and it gives the government some control over bank lending by requiring banks keep reserves. The fact that bankers can create money out of this air creates certain ethical problems. Using reserves as a check on banks mitigates some of the worst of those problems.

        We like to think of investment as money. But its really not, its labor. When you invest, your always investing the result of someone’s labor. So the key to investment is having available spare labor, or labor that can be put to better use. I’m just throwing out these ideas because you mention Peter Schiff, and honestly, he’s not a real reputable economist, and doesn’t understand some of these basics.

        But love the site!

      • Tina May 13, 2019, 8:06 am

        I am posting late to this thread…I happened upon a book published in 1978, ‘Muddling Toward Frugality’ which MMM you may have already mentioned in all of your writings, yet I mention it now, in case you haven’t. It was written by a geography professor at San Diego State. On page 191 he writes, “More and more, the key to economic survival will be to learn how to get by with less income.” His angle is much more a large picture than say Your Money Or Your Life…”more and more it appears that the prospect for sustaining a high level, industrial society are declining, while the prospects for a simple, decentralized way of life are good.

        • Mr. Money Mustache May 13, 2019, 8:47 am

          Haha.. yeah as that book illustrates, bleak predictions about the distant future are a notoriously bad type of bet to place, as human society is many times wealthier per capita now (and arguably much better off overall) than it was in 1978. I think this will continue through our own lifetimes.

          But whether we are in a time of material surplus or material shortage, the same principles apply: living purposefully and developing a satisfying range of friendships and skills is always going to be the key to making the most of your life.

  • Gerard July 17, 2014, 7:04 am

    Interesting piece. This is definitely a situation where the fallacy of composition applies unless you concede that the economy would have to change utterly.

    However, I think our mustachioed friend is wrong in a few ways.

    1. The economy’s demand for investment (which prompts savings) requires profitable ventures. There needs to be sufficient aggregate demand, essentially consumption and exports, to prompt people to make investments. If everyone were sufficiently badass demand would wilt to the point that the marginal product of capital, or interest rate would be virtually zero, or negative. In fact, what we have seen post-2007 is a similar demand effect on a smaller scale. This would cause the long run supply of capital to decline, not rise, because capital depreciates and needs to be replaced.

    Go to your analogy of the fisherman. Suppose he decides he only needs 3 fish a day to live on rather than 5 (the kind of lifestyle clawback routinely advocated here), well he won’t bother inventing a fishing hook with the remainder because the improved efficiency just isn’t worth the investment of time for such a small level of output. Would you switch from a Dodge to a Prius to save gas money if you only drove once a year?

    2. There is a problem with scope. Exports is a convenient out here because it rests on the notion that the rest of the world will continue to consume steadily while Americans become badass. If the whole world were to follow us into lower rates of consumption? See point 1.

    3. Finally, maybe I’m cynical, but I think investments in productivity-boosting or life-enhancing technology do not occur because people’s creativity blossoms. Innovation occurs within huge corporations completely driven by the profit motive. Or, it comes from the government which needs a lot of tax revenue to drive innovation — to say nothing of how much it costs to upkeep roads, schools, etc.

    I love this site, and I’m working on saving more of my money and becoming more of a DIY kind of guy. But I think the fallacy of everyone becoming a MMM is a real one, it wouldn’t be possible, or really desirable for those who are.

    The general idea though is not new. In 1930 John Maynard Keynes speculated the same thing. http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

  • Ricky July 17, 2014, 10:25 am

    A few things:

    “It turns out that’s a great problem to have. Through the natural action of free markets, we’d end up doing a mixture of two things:
    a) Exporting way more stuff and importing less”

    This really contradicts what you say towards the end of your post. You’re directing this post to the whole world, not just America, right? We won’t export anything since there will not be a reason to, right? So we won’t have that extra income since everyone in the world will be so frugal and self reliant like you say. I’m saying it contradicts insofar as you’re assuming two different scenarios. In this scenario, we live frugal but the rest of the world doesn’t. But then you go on to say “So, frugality as a whole would work very well for society. We’d produce less, and we’d earn less, but that is perfect since we would consume less as well.”. Point is, we can’t export more if the whole world is consuming less…

    Second, its not basic economics that if you produce less and consume less that it will suddenly be faster and easier to get to where you need to be. If you still want a lifestyle where you buy groceries, pay for electricity, go to school, etc, you’re still going to have to work just as hard to afford these things. You’re assuming that pay stays the same but the costs of these things go down. Thats not the case. The prices will be correlated and thus it will take nearly the same amount of time to do what we do today to do what we do if everyone became frugal.

    Our economy is not necessarily consumer driven nor productivity driven. Everything we buy or spend money on is categorized into two categories: tangible and intangible. Consuming LESS as a society as a whole isn’t the answer because it will still take just as long to get to your financial goals. People born in 1920 sure as heck CONSUMED less but they also lived WORSE. And it took just as long or longer for them to retire.

    The only way to fix society is to step back from it. You can certainly live without electricity, buying groceries, or having anything nice and convenient that we’ve worked for the past 2000 years. But are you REALLY going to convince anyone to do that?

  • Jonathan July 21, 2014, 7:56 pm

    If everyone is frugal we might wonder where our savings will be directed and how will everyone be employed.
    You’re on the money when you say that our savings can be directed to better things and/or we can choose to work less. I think it comes down to how strong or weak is the concept that prices and wages tend towards a general equilibrium and goods and services “clear the market”. In the days of the gold standard, there might have been a concern about deflation but I think central bankers and policy makers are getting better at their job. Some countries were able to navigate the great recession very well.

    JM Keynes discusses this in his essay, “Economic Possibilities for our Grandchildren” – can be found online here: http://gutenberg.ca/ebooks/keynes-essaysinpersuasion/keynes-essaysinpersuasion-00-h.html

    While the market economy is very powerful, I’m doubtful it means it will always achieve full employment on it’s own. If we define full employment as working for someone else. There might also be distributional or institutional issues that emerge as people have to rely more on self employment. What if someone owns all of the water or natural resources? Does that not recreate something like a monarchy? In order to buy all this cheap stuff and work less we have to be able trade for it. If you don’t own resources and don’t have skills that someone else wants, you might have a real hard time in the future. The classical liberals thought that we should only own as much as we can make use of. I can see this applying to land but don’t think (or am not sure) it applies to man made capital.

    Because of these issues, I think it’s realistic to have some sort of basic incomes or citizen dividend policy – or something of this sort. Along with aggregate demand policies – monetary or fiscal – this would go a long way to making sure that people can enter the market with some reasonable ability to bargain for wages that provides for the essentials. I like to think that prices convey some sense of supply and demand but I question the initial configuration of the distribution of resources.

    I totally think this is all achievable. As people adopt your message they will become happier people, have less wasteful consumption, and the world becomes a better place for it.

  • Lorrie July 22, 2014, 12:52 am

    I love that you made a post about this. I was going on a walk with my husband and I was talking to him about this very subject. I told him that a lot of times I choose to follow a path, lifestyle, make a choice. Before I choose said path, lifestyle, or choice I tend to ask myself “What if everyone did this?” “Would it be good for the world?”. My husband told me generally that is a smart thing to think about before you make a choice. Since my father died I have really been reflecting upon my choices in life. My husband found your blog. Since finding your blog we have saved over $1,150. We have a plan to pay off our debt. It will take 2 years at the rate we are going if we save about 50% of our income. Then we plan on looking into investing and retiring early. (Well I guess I would be retiring early because he is twice my age). My husband and I are reading your blog everyday and we find your logic hard to beat! I gave away all of my makeup and we gave away all of our books. This new way of life really makes me think about every action I take. For the first time I really feel fully driven with priorities and goals!

    • Joe Average February 5, 2015, 11:00 am

      But why give away things that were not costing you anything? I have a pile of books and hope to have some of them to my last day on this earth. Maybe my kids will want to read them along the way. Same with my tools. Not costing my anything but space in the garage but each has saved me $$$ b/c I did not have to rely on a mechanic or a repair service to accomplish some repair or upgrade.

      Good luck to you.

  • JB July 31, 2014, 7:37 am

    OK, but if society started to eat at home and not go out to eat, many restaurants would close and that would be job losses. You can’t keep a restaurant open with just a cook and a waiter if you have nobody to serve. Auto makers had issues when people stopped buying cars and keeping their cars longer. Now, auto mechanics saw an uptick in business, but consumers can decide to impact certain businesses.

  • Johan August 19, 2014, 3:38 pm

    Hi MMM and thanks for a very inspiring blog!

    I just have to ask you if you, when you think about it twice, sincerely think that :

    “What is the engine of growth, then? It is the savers and investors. Only by sacrificing current consumption, can people put money into banks or share offerings, which end up in the hands of new and existing businesses who can then use that money to create new technology”

    I interpret the “system” to be like: Business is the engine of growth, creating wealth, or making wealth possible through desire from consumers. When someone takes a loan, then money is created. Money doesn´t “end up” in the hands of … 97% of the GDP is just “numbers” created when you for example take a loan for a new business. If you are successful in your business you create a desire for your product or service at a higher price than your original investment.

    What is your take on that?

    Sincerely / Johan

  • Cole Thompson September 24, 2014, 5:38 pm

    This is actually pretty close to the thinking behind Steady State Economics.

    Although a lot of extra ideas have been worked out in SSE about how to minimize the bumps and pain from shifting from an economy that maximizes consumption as a goal, to an economy that maximizes human achievement as a goal. Herman E. Daly has some pretty accessible books on SSE, I like “Beyond Growth.” SSE seems to be the *only* school of economic thought that addresses all the tough long term questions in a credible , non-contradictory way.

  • David September 26, 2014, 1:57 pm

    I noticed that SUV sales are still greater than car sales and that the majority now commute to work in a truck type of vehicle. I think I’ll just keep depending on the masses to not be frugal and live off of them for now. Still, I hope our society finds the will to change because global warming is going to get us starting now. I pity the kids growing up today. The weather is going to be ghastly and the insects will be overwhelming.

    Car buyers in China now prefer SUVs, too. That will not be helping much. Nobody appears to have ever read the first chapter in the physics 101 book. We are at the mercy of willfull ignorance.

    • Joe Average February 5, 2015, 11:14 am

      SUVs and pickup trucks are evolving though to cope with higher fuel prices (though right now fuel is below two dollars here).

      Dodge sells a four door full size turbo diesel pickup now that gets 30 mpg on the highway. Compare that to my CUV from 16 years ago that is half the size and gets ~25-26 mpg.

      Dodge is selling their truck with a Fiat sourced V-6 turbo diesel that is very quiet. Ford is selling their Ecoboost trucks with a V-6 gas engine and a turbo and they have switched to aluminium construction.

      The problem now is the sub-$2 gasoline which could kill off efforts to sell electric cars and trucks. It could also (probably will) lead the average mainstream person to return to a 16 mpg-something for commuter duty vs something that gets 45-50 mpg. In Europe nice cars can be purchased that get 65-70 mpg in a nice grocery getter format like the Ford Fiesta and the VW Polo (think 1980s size Rabbit) with plenty of creature comforts.

      While I will not get rid of my faithful CUV, we do plan – regardless of fuel prices at that moment – buy a VW TDI Sportwagen. Big enough to get the job done and still efficient. We really don’t expect sub-$2 fuel to last very long – maybe a year or two. Then we’ll be right back where we were a few years ago with $4 fuel. I buy vehicles and keep them “forever” (15+ years). Can’t afford to buy extremely specialized vehicles such as a Smartcar which won’t fit my needs most of the time like our CUV does. The CUV will continue to be our daily driver (short commute) that gets all the wear and tear and the VW TDI SW will be our long distance going to Grandma’s house car. When the CUV wears out I’ll either replace it with another one or simply replace the engine and keep driving it.


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