From Elliott Wave International:
For many years, the credit-card industry wanted you to be able to use your plastic to buy your burger and fries at the drive-through. But the fast-food industry always politely said “no way,” since its business depends on how quickly their servers get you in and out. Making cashiers punch card numbers and hand you slips of paper to sign is no way to shave seconds off the average wait time per customer.
Yet the card industry was willing to bargain. It offered to waive the signature requirement and even to reduce the transaction fees for fast-food merchants. That’s enticing, but if you’re wondering why McDonald’s Corp. really agreed this past March to accept cards throughout its restaurant chain, you needn’t wonder any more:
“McDonald’s found the average transaction jumped from $4.50 to $7 when customers used debit and credit cards instead of cash,” according to a recent piece in The Wall Street Journal.
I wonder how much of the increase of the C component of GDP can be accounted for by that plastic effect. It’s no secret that debt has been funding our GDP expansion – it’s almost all G, which is always debt hence the imminent raising of the debt ceiling again – but it’s factored into C as well.
These levels of debt have never ended well in the past. I still wonder what is so new and different about computers and Greenspans “productivity miracle” leads adults to think it will be any different this time. I wonder just how low the NASDAQ has to go before people will start to wise up.