Wednesday, February 18, 2009

Spending Is A Trap

Clearly, we are not going to spend our way out of this economic collapse. Saving, what people did to lived through the last depressions learned, was the way to wealth and prosperity, albeit very, very slowly.

Of course the government can print all the money it wants, but unless it gets people gainfully employed, and working so they can improve their savings, then the won’t be any improvement on the spending. You see, spending with out means, is a loan - bad or otherwise - which involves sharks (let’s call them Bankers for reference purposes). Spending only after you have earned the capital to do so, is responsible consumerism. You, the consumer, are in control.

To turn the topsy-turvy back in the proper order, I suggest it’s savings first, then spending, not the other way around.

1 comment:

Anonymous said...

Spending is a tax

''It is common to speak as though, when a Goverment pays its way by inflation, the people of the country avoid taxation. We have seen that this is not so. What is raised by printing notes is just as much taken from the public as is a beer-duty or an income-tax. What a Government spends the public pay for. There is no such thing as an uncovered deficit.''

- John Maynard Keynes, 'Tract on Money and Reform,' published in 1923.

Keynes identified The Paradox of Thrift. What's good for families isn't good for the economy overall.

There is also opinion that taxes on income should be raised in a recession/depression. Only people who have income pay the income tax. Less money in the hands of workers leads them to being more creative, to restore their net income. Creativity lifts all boats.

Is there anything to be learned from the Great Depression, circumstances being so different today? No one knows.