Dangerous Minds pal Charles Hugh Smith has posted another must-read essay at Of Two Minds:

I just Googled “demand exhaustion” and came up with an obscure real estate paper from South Korea. Therefore I am claiming the right to coin this phrase as a general description of the end-state of global over-capacity and the saturation of U.S. consumer “demand” for more stuff.

Classic economic theory holds that consumer “demand” is insatiable and can never be completely filled. While that is true of the FEW resources (food, energy and water) and essential items which eventually wear out like say, tires, the “demand” for everything else appears to be largely artificial now, an urge prompted by relentless advertising and the accessibility of instant credit for more purchases (credit cards).

How much of the “demand” is organic, that is, flows from human desires for additional comfort and amusement? It could be argued that all of this is “organic demand”—or in the case of the dog bed and treats, “projected demand” (since the beloved pet probably would be just as happy or even happier with an old pillow and blanket).

On the other hand, it could also be argued that the returns on investment are increasingly marginal for most of these consumer goods. How much comfort and amusement can you wring from a second or third TV or your 40th shirt? How about that spa which gets used less and less as time marches on? Shall we label this “marginal demand” because the returns are increasingly marginal?

Every Day Is Christmas in America (as long as you have credit)