You got to be kidding me...

I've been intermittently reading Innumeracy: Mathematical Illiteracy and Its Consequences by John Allen Paulos. As the title suggests, it's about all the little (and not so little) ways that people get into trouble by not understanding or applying even simple math in everyday life. He introduces his theme with the example of a weatherman who asserts that the 50% chance of rain on each day of the weekend means that there is a 100% of rain during the entire weekend. That's awful, but here's something even worse:

Goldman Sachs said homeowners had treated windfall gains from rising house prices as if they were "recurring income", using home equity withdrawls to subsidize over-stretched lifestyles. This artificial boost to spending has already dropped from 7pc to 4pc of GDP over the last year, and is likely to halve again in 2007.

Spending a one-time bonus on everyday consumption isn't something any sane, rational person would do. It makes no sense and is the very definition of living beyond your means. Yet, lots of people have done and are doing it. Why? It can only be that they just don't know the difference. Money is money, right? Well, of course that's not right, but we all know people who just don't get it. The scary part is that those blissfully ignorant folks could tank the economy for all of us.