Sorry, but 60-70%+ of our economy is spending. If individual citizens
won't
spend (within reason and have a reasonable savings rate too) then the
economy
will have trouble. There are lots of factors involved - bad debts and
banks won't lend,
etc.
However, there does need to be spending in the economy. So the Gov't
needs to step
up and spend. Classic Keynesian economics.
Savings are good too, but savings alone will not move the economy along.
Stephen Thompson
Mpls, MN
Mike Oliker wrote:
Are we fighting the last Depression with this stimulus bill, when our
situation is quite different? In 1929 we had a huge bubble of factory
building, leaving us with tremendous idle capacity. People were
saving a great deal and investing it in stocks which collapsed.
Today we have borrowed massively against assets which has dropped a
lot in value. Our economy has been consistently stimulated within an
inch of its life. Perhaps more stimulus is not the answer.
Perhaps what we need is a massive savings plan. Cut withholding taxes
for a few years -- it is broad based with a bias towards the low end
of the scale, it helps businesses which hire or keep their employees,
and people will save it -- which is a good thing. They will pay down
their mortgages and their credit cards and cash will flow into banks
as equity, helping to repair everyone's balance sheets.
From a base of fiscal soundness we are better able to make the
transition to an economy featuring more savings and exporting and
infrastructure greening/modernizing and less consumption. The economy
we had, based on borrowing against our houses to consume a lot, is not
coming back; at least not anytime soon. We need to move towards a new
economy which is waiting to be born.
-Mike Oliker
Albuquerque, NM
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============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
