Tuesday, March 10, 2009
Saving money? Isn't that hurting economy?
With the Recession going on, people are starting to budget themselves and save money where we can. But isn't spending the way to turn the economy around? If people start saving, no money will go to business's and if no money goes to business's more people get laid off or fired. Yes saving some is a good thing, but if people do not start spending how will the consumers start getting more confident into buying products? Just something I put some thought into, what do you guys think?
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2 comments:
This definitely depends on how they are saving the money...keeping it hoarded away in a safe in their houses would be very bad for the economy. However, if people are starting to trust in banks and depositing their money there, maybe the banks will be more willing to start lending again which would be very good for the economy. Although how does one convince a population that things will be safe if they put their money in the banks? No matter how much stimulus money you give, no matter what other plans the government comes up with to try to jumpstart the economy, they won't work unless United States' citizens play along. I'm really curious on how a government persuasively argues for people to keep spending money and trusting failed banks?
No, saving money is what we need to do. We've spent too much for years, so now we need to save to make up for that.
Businesses need to fail because they are meant to provide a service that people no longer desire (since they would rather save than spend). Once we have liquidated debts and built up savings people will begin to demand more goods and services.
The only way for the US to spend more money now is to borrow, which will just push us further into debt and create more problems.
There will be people that are unemployed, but it takes time for the economy to rebalance around production rather than unsustainable consumption.
You need to save money first for there to be any investment, and remember that the money will eventually be spent.
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