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Originally Posted by Lordblood
I think at the moment it would have to be government spending, as tax cuts are not going to directly encourage anyone to spend.
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encouraging people to spend when they're leveraged to the hilt & their personal asset bubble (HOUSE) just popped is ludicrous. the thing i don't understand is this:
why do people assume that if money is SAVED, it is not working in the economy?
if people aren't spending, they are either:
a) placing it into some type of savings account, whereby it can then be loaned out to others. this has a multiplier effect.
b) investing it, whereby it can provide needed capital for future production
c) de-leveraging
the real problem is that right now, most people fall into category C. they are paying down debt rather than saving. encouraging spending when, in aggregate, the populace is leveraged to the hilt, is not only irresponsible, it won't work! we pulled forward too much future demand with borrowed money. that leaves a consumption gap. at some point, we will have to pay the piper. the longer we wait, the worse it will get......