Consumer credit declined in November (the most recent month for which the Fed has numbers) by 3.7%.  It was the second month in a row that debt on things like credit cards and auto loans fell, and when the December numbers come out it will likely prove to be month three. To read most of the business press and listen to Washington pundits, this is a terrible thing.

True, it’s impossible to separate this reduction in debt from declining consumer confidence (at its lowest level in 40 years), dwindling retail sales (down nearly 2% in December), increasing layoffs (nearly two million jobs lost in the last four months of ’08), and the other effects of this negative economic cycle. We’re now in a spiral from which nobody knows when we’ll emerge. But easy money is one of the things that got us into this mess, and while the government is trying to (as someone recently put it) fix a debt problem by borrowing more money, the real world is wisely scaling back.

There’s no doubt that more spending would help relieve some of the worst symptoms of our economic malady. But using debt to spur spending is like trying to climb out of a hole by standing on a shovel–it’s only going to get you in deeper.  Many consumers and corporations have woken up to this alarming fact, as evidenced by the above numbers. The sooner we all do, the better.