This idea goes by many names, although I prefer this one since it seems to be fairly clear about what it is describing. Some of the others include:
unlimited wants and scarce resources
infinite wants and finite resources
fundamental economic problem
For more about the definition, see E2's own: economizing problem.
Wants are fairly subjective. You might like one thing and your partner might want something completely different - and thus begins the arguments that strain relationships. (But that's another story.)
Anyway, I submit that it isn't really logical to assume wants / needs are infinite. I would say wants / needs are often determined by advertising, which often preys on the "irrational" aspects of human behavior, just as Buddhism may "prey" on the same aspects in order to dispel a person's wants / needs.
One of the problems is that once capitalism had set property ownership in stone, then other people are forced to produce more and more useless things in order to make a living.
For example, say some agribusiness owns vast amounts of farmland and is already producing more than enough food for everybody. Maybe there isn't enough farmland left for anybody else to use, or maybe the agribusiness can simply outcompete any other small-scale farmer trying to enter the market. What's left?
Well, there is no other recourse than to find a non-farming related occupation. Maybe it's entering a factory producing plastic toys for people's dashboards. However, as you can see, this job is really pretty useless - nobody really needs plastic toys on their dashboards. So how is the entire sector of useless industries sustained? Advertising. The goal is to convince the people in the agribusiness to trade you their stuff for your plastic toys.
All the major media in some societies are funded by product advertising. What kind of people are those kind of messages likely to raise? Most people don't want to admit you've been brainwashed by consumerism - just as the followers of the world's religions won't say they've been brainwashed by the religious messages their societies give them.
The people of the various religions may make the argument that their religion is good for society. Can the same be made for consumerism? It's not even like people have an intrinsic need to advertise products - they are only forced to do so because if they don't, their company may go bankrupt and they'll be forced into economic hardship - which is only a problem in capitalist society.
So you've got overworked plastic toy makers and you've got overworked agribusiness employees. This is measured as an increased GDP and considered "increasing prosperity" by some idiots.
So after the bubble pops, of course, the plastic toy makers would be among the first to go - it's much easier to cut back on spending for toys than on spending for food. Maybe the remaining plastic toy makers would redouble their efforts at advertising, trying to convince the food producers that they should buy more toys.
The food producers meanwhile think, "why should I help you unemployed toy makers? I have to work for my living, so you should too." So they go back to working their 80 hour weeks, while the unemployed go back to "working" their 0 hour weeks. "Brilliant", eh?
As I see it, either there are industries that still need people working in them, in which case the economy should train as many of the unemployed that it can to fill those industries... or there aren't any more industries that still need people working in them, in which case the economy should let the people take a f**king break.