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This is everything that is wrong today with "economics" and what passes for economic literacy which is really economic idiocy.
It's what I call the "rich man's paradox", which is that rich people own Rolex watches and drive Lexuses, so if you want to be rich, you should buy a Rolex and drive a Lexus.
In other words, if a thriving economy has people spending, then if you want
the economy to thrive, you should get people to spend.
Remember Bush Senior's famous phrase? This is true Voodoo Economics! And worse is that Obama the Statist believes it...
Rise in savings hurting economy
Economists say hard times will persist as Americans continue to avoid spending, credit.
Martin Crutsinger / Associated Press
WASHINGTON -- Americans are hunkering down and saving more. For a recession-battered economy, it couldn't be happening at a worse time.
Economists call it the "paradox of thrift." What's good for individuals -- spending less, saving more -- is bad for the economy when everyone does it.
On Friday, the government reported Americans' savings rate, as a percentage of after-tax incomes, rose to 2.9 percent in the last three months of 2008. That's up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago. Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.
Economists say hard times will persist as Americans continue to avoid spending, credit.
Martin Crutsinger / Associated Press
WASHINGTON -- Americans are hunkering down and saving more. For a recession-battered economy, it couldn't be happening at a worse time.
Economists call it the "paradox of thrift." What's good for individuals -- spending less, saving more -- is bad for the economy when everyone does it.
On Friday, the government reported Americans' savings rate, as a percentage of after-tax incomes, rose to 2.9 percent in the last three months of 2008. That's up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago. Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.
This is everything that is wrong today with "economics" and what passes for economic literacy which is really economic idiocy.
It's what I call the "rich man's paradox", which is that rich people own Rolex watches and drive Lexuses, so if you want to be rich, you should buy a Rolex and drive a Lexus.
In other words, if a thriving economy has people spending, then if you want
the economy to thrive, you should get people to spend.
Remember Bush Senior's famous phrase? This is true Voodoo Economics! And worse is that Obama the Statist believes it...