Imagine driving down a highway on a sunny day.  Listening to the radio, your knees steadying the wheel as one hand checks your blackberry and the other holds a non-fat latte,  all while going about 75mph.   Two years ago, that’s pretty much what our economy looked like.  But while we all had our heads down, something happened.

Pretty quickly, that sunny day turned dark and stormy.  Suddenly, we found ourselves slowing down, dropping the phone, setting down the latte, and white-knuckling the steering wheel.  In the face of uncertainty, logic tells us to buckle down and save, save, save – yet, a large portion of the country keeps spending money.

Even amidst a downturn, the uncertainty of job security and falling home values, the adage “doing our part for the economy” seems to ring strong and true for some.   As an example, in the first three days of its June debut,  Apple’s new iPhone 3GS sold over 1 million units – at $200 a pop.

What exactly is going on here?  Undoubtedly, it’s a younger more brazen audience that is buying up the newest greatest technology, and clearly they’ve got the disposable income to do it.  But are we doing the equivalent of running with our heads leaning too far forward?   Even the U.S. government encourages us to spend – sometimes beyond our means (which is how we got here in the first place) – by luring us in with promises of tax credits, stimulus money and other incentives.  We all know we’re a consumption society – and the economy is surely dependent on the consumer to do what they do best: consume.   But in a country that has eaten, burned, grown, saturated, melted, cut and farmed itself to the brink of disaster, you’d think we would have learned by now.

On the most basic level, the economy relies on the principle of supply and demand to keep things flowing.  But this equilibrium really only exists perfectly when markets are confined.   With a global market, supply instantaneously increases and prices fall dramatically.  As we become more and more reliant on cheaper goods and services, we want more – not less – and we want it at the cheaper price, and by the way, we want it now.  It’s a microwave economy in an oven world.

It seems counter-intuitive, doesn’t it?  Spending your way out of debt.  But so does keeping money out of the economy entirely by saving.   The truth is, there is no magic bullet, and it’s going to take a long time to get to a place where everyone feels comfortable again.   All you can do, is spend within your means, avoid consumer debt, and always pay yourself first.