Spending to save

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?

This entry was posted in budgeting and finance, current events. Bookmark the permalink.

4 Responses to Spending to save

  1. courtney says:

    It seems like a valid point to me. Of course, I’m generally retarded about economics, so I really have no idea.

    I think the basic problem is that people are living in extremes — we’re either spending money like it grows on trees, or we’re on budget lockdown. I really think moderation is the key to fixing everything and, more importantly, keeping it fixed. Is it so tough for people to live within their means? Sigh.

  2. Mickey says:

    I’ve been spending more lately, but for me spending at all is “more.” It’s not out of patriotism. Rather, having a job lined up has loosened me up a bit.

    I still go back to the fact that our economy is based on unsustainable consumerism, so it’s destined to fail.

  3. courtney says:

    This is unrelated, but guess what’s playing at the Bijou tomorrow night? LEBOWSKI! We’re going to go see it; want to come?

  4. Allie says:

    I’ve been thinking more carefully about where I spend my money. Trying to stay local when I can, because the economy in this area has always been fragile.

Comments are closed.