Newsweek has a thought-provoking cover article this week urging consumers to start spending a little bit more money in hopes of reviving the economy.
A passage from the article by Daniel Gross:
Nobody is advocating a return to the debt-fueled days of 4,000-square-foot second homes, $1,000 handbags and $6 specialty coffees. But in our economy, in which 70 percent of activity is derived from consumers, we do need our neighbors to spend. Otherwise we fall into what economist John Maynard Keynes called the “paradox of thrift.” If everyone saves during a slack period, economic activity will decrease, thus making everyone poorer.
It’s hard to swallow in this economy, considering either we all know someone (or are the ones) who have lost their jobs or are struggling to make ends meet. But for people who have the money, it seems like a valid point.
What do you think?