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Ok, sure there are other factors involved, but the exact definition of the word economy is: a. Careful, thrifty management of resources, such as money, materials, or labor:
b. An example or result of such management; a saving..
c. The system or range of economic activity in a country, region, or community. WE ARE THAT SYSTEM!!! People if we don’t spend money, of course the economy is not going to get better. Nobody’s saying spend all the money once, but still spend! F*ck the national debt, there’s always gonna be national debt no matter who’s in charge. There are plenty of people out there who never invested, never had credit cards, never owned a home, but they still spend money on a regular basis. And that’s what needs to happen so that this country can move on instead of playing some stupid blame game and criticize this and that person for this or that happening. If the economy still doesn’t get better after the next 2 or 3 presidents it will be because not enough spending is going on in this country.

5 Thoughts on WHY HAVEN’T “PEOPLE” FIGURED OUT THAT “PEOPLE” ARE THE ECONOMY?
  1. Reply
    Mary
    July 6, 2011 at 9:35 am

    g55445

  2. Reply
    Acid
    July 6, 2011 at 10:03 am

    earlier we all knew “what goes around comes around” but now what goes around doesn’t come around, so why spend … but if you realise that 5% of the population own all the money, they are the ones who should be and would be spending anyway, there are a lot of people with a lot of money in reserve, this money can get things up and running again, we the average people are just waiting for them to spend it.

  3. Reply
    Steve B
    July 6, 2011 at 10:18 am

    No dude. The paradox of thrift is a bunch of bull-crap.

    Growth comes from capital; capital comes from savings.

    We have to live within our means for a while.

    Edit:

    While I understand what Jerry is saying, and I agree that obviously there is a need for some consumer spending, the point I’m trying to make is that we have Overconsumed and have undersaved.

    We have lost our productive capacity and stand no chance at getting it back until we regain the capital necessary to invest in production.

    If we keep become lendees just to spend money, we going to be left with a whole bunch of useless junk with nothing to show for it when the bills come due…

  4. Reply
    jerry w
    July 6, 2011 at 10:53 am

    Without customers, businesses will not increase production, and will not hire workers. It doesn’t matter how much savings is available for capital investments. Businesses will not invest if nobody is buying.

    You are correct in the sense that if enough people spend, it will help the economy. This is a case where people acting in their own self interest doesn’t necessarily translate into what is good for the overall economy. In a recession, individuals are not necessarily motivated to spend.

    The problem is that any individual’s spending pattern is much too small to have any effect on the economy as a whole. There is no incentive for anyone to spend more than they think would help them, just to help the economy. It would take many, many consumers to start increasing their spending in order to have any noticeable affect.

    I have to disagree with you on the other point: the national debt is important, and must be dealt with. It causes a number of problems, most noticably the fact that it causes future budgets to include more and more interest payments, leaving less available for other budget items. But this needs to be dealt with when the economy is humming along at full employment: trying to decrease the national debt during a recession will only prolong the recession. During good times, more tax revenue (to use towards debt reduction) will be available to be collected anyway.

  5. Reply
    Matt M
    July 6, 2011 at 11:46 am

    The short response is, we assume that people are rational, when so many times people are irrational. I think it would help us all if we understood the choices that people make come from the ways they understand the world, and the things they do to reinforce that understanding.
    The other part of that short response is, it’s not so much what a country spends, but how much a country produces given the resources it has. Think of it like a quarterback in football. If you’re throwing a lot of interceptions, you shouldn’t let that keep you from dropping back and airing it out, but if you’re not getting any yards throwing the ball, does it matter?

    Intro economics students know that households play a role in the economy. There’s really 3 entities that work together in the economy. Households, Firms and Governments. People are behind the decisions that firms and households make as well as government policy. I mean economics is the a social science, it’s the study of people. Here’s the thing though, Economists assume that people are RATIONAL and make RATIONAL choices (i.e. households maximize utility, firms maximize profits, goverments maximize social benefit etc.) but the thing is many times people make IRRATIONAL CHOICES.

    Now, it’s really easy to figure out how people make rational choices. You can solve math problems and build easy to follow models to figure that out. Figuring out how people come to irrational choices is a different thing entirely.

    I think the trick to looking at irrational choices has nothing to do with economics and more to do with epistemology and the theory of knowledge. You have to look at perspectives.

    Governments fail to see the big picture and spend crap tons of money now, print cash to pay it off, and put the burden on their grand kids that will be paying for it in inflation after their dead. It’s a matter of perspective, so a 50 year old politician isn’t going to see spending money the same as a 24 year old who just started saving for his retirement in 50 or so years.

    You know there’s people who sees life as a series of moments instead of a linear path with a beginning middle and end (neither is wrong by the way). Obviously, they’re not going to invest their money when they can spend it now, just like how they’ll drive to Montreal on a Sunday for god knows how long and figure out how they’ll explain it to their job whenever they get back, or decide to open a business one day on a whim, no reservations. Investing and saving make absolutely no sense to these people, and they’d be absolutely miserable living a thrifty lifestyle, so the trade off is super worth it to them. Our perspective is different, our priorities are different, and that’s what makes us special as human beings. What’s amazing is that we figure out ways to live together peaceful despite the different ways we understand the world.

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