Aug 042009

I think its fairly common knowledge, sad as it may be, that Americans are terrible with their money.  The save very little, spend more than they make, and are very susceptible to marketing and advertising.  It is quite frightening how many people out there, and I’m not talking just right now when we are in a recession but even in good times, how little people save and how much they overspend.  There are people stealing my tax money claiming they need unemployment benefits, yet they each have cell phones, a nice flat screen TV and cable, a new car.   Its as if Americans feel they are entitled to have all this stuff, and to take it away from them is like cutting off a limb.

But I digress.  I have a question for anyone who knows about economics out there.  I always hear in articles that the American economy is based and predicated on people spending.  When Bush Jr. gave out those tax rebates, he encouraged them to spend it, not save it because if they spend, it improves the economy.  So, my question.  Why is it that everyone always tells you to save x percent of your paycheck to save for a rainy day and stuff, but when there are things like tax rebates the government and media put out articles that the rebates will not work if people just save the money and put it in their bank accounts.  They have to spend it to stimulate the economy.  Does that mean it is not possible to have a good economy when Americans are not stupid with their money?  Can the American economy be successful and not in a recession if every American saved x percent of their paycheck into their savings account and only bought things that they needed?  Can an economy be “stimulated” if everyone saves their money?  Is it possible?

If saving your money is supposedly a good thing for you, but bad for the economy, then what is the right thing to do?  I just don’t have a good enough understanding of economics to answer that question.  Would we plunge into another Great Depression if every American all of a sudden became good and smart with their money?  Or, is our economy predicated on the fact that we have to be stupid with our money for the betterment of all?  Kind of scary if that really is the case.  Indiviually you can save your money, hoping that there are enough morons out there to stimulate the economy and allow you to keep your job.  Is that how the American economy is supposed to work?

Leave a Reply