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Spend spend spend (who, me?)

Martha Olney, adjunct professor of economics | October 9, 2009

When no one buys what you produce, you lose your job (or, if you own the company, your business).  The U.S. economy has suffered millions of job losses because we are not spending enough to keep everyone in their jobs.  Look at Table B-1 of the BLS monthly jobs report and it’s clear:  every industry other than health care has lost jobs in the last year.

So in a sense, the solution is clear:  more spending.  Lots more spending.  More spending for goods & services will put people back to work.  Buy a new house (construction workers get work. So do mortgage brokers and bankers).  Buy a washing machine (durable goods manufacturers get work, as do truckers who transport those machines to Sears’ warehouse and from there to your basement).  Go out to dinner (restaurant workers get work, as do printers who print up that new menu you’re reading).  Pay more taxes (school teachers get re-hired, as do the staff members we eliminated in the department).

“But, wait!” you say.  “Spend more?  Who, me?  I can’t.  Pay cut, furloughs, job loss, job may be lost, 403(b) decimated, house worth less than I owe on it . . . need I say more?”  You’re right; you can’t.  And as that tense conversation at your dinner table the other night underscored, in all good conscience, you probably shouldn’t run those credit cards up any further than you already have because word on the street is that your bank may be reducing your credit card limit soon anyway.

So who can spend more?  Not the state or local governments — their budgets are slashed to the bone due to declining tax revenue.  Not most businesses — they are waiting for strong signs of resumed consumer spending before they pour a lot into new machinery.  Not the rest of the world, which purchases our exports — they have their own problems.   Who’s left?  The federal government.  Politics aside (and that’s a big aside), what the federal government needs to do is direct money to the state and local governments.  Stop the budget cuts at the state level.  Stop the bleeding at the local level.  Get the teachers back to work.  Get the staff back to work.  Who knows:  They may even go out and buy a washer with that first paycheck!

Comments to “Spend spend spend (who, me?)

  1. That is absolutely right. The federal government should provide money for the localities so people can also have more jobs.

    I’ve always wondered how that works, the strange balance between spending and saving. Like the economy is some kind of weird, man made machine (which it is) that needs to be kept alive with food, and the food is money. So we need sacrifices: spend like crazy until you “nearly” go bankrupt…and ya never know, the machine might start working again…It strangely works somehow, but not after a lot of suffering from many.

  2. Perhaps the sollution isn’t spending much much more, but rather spending much wisely, encouraging products which aren’t imported and supporting the ones created back home

  3. I think it will take years of pain, even before we can relax. This is a global economic slowdown and may take some time to recover. Still clunky!

  4. We give an annual state taxes, but who knows where the treasure is, whether from government or a politician?

  5. I think it will take years of pain, even before we can relax. This is a global economic slowdown and may take some time to recover. Still clunky!

  6. Fiscal responsibility is a little like fitness. Everybody knows it’s good for you, but nobody ever seems to get off the couch. I’d like to see more responsible monetary policy, but I’m not holding my breath.

  7. The federal government is ridiculous. Everyone wants more money all the time. As soon as someone makes $ 100,000 a year will take home less than 50% of the salary they deserve. E ‘f * s $ * pisses me off.

    That’s what I think anyway …

  8. The federal government is ridiculous. All they want is more money all the time. Pretty soon someone making $100,000 per year will take home less than 50% of the pay they earned. It f*$*ing pisses me off.

    Thats what I think anyway…


  9. I think it will take years of pain, even before we are able to relax. This is a global recession and may take some time to recover. Still need to maintain tight!

  10. The government is broken. It is no longer by the people for the people. It’s over the people, regardless of the people. Sound familiar? The position of president is slowly moving back towards King. And there’s nothing that anybody is doing about it.

    They spend our money, without our consent. They tax us without our consent. They do not listen, we do not MAKE them listen, and what’s worse? Now they even have made it illegal to dissent… Thanks Patriot act. You’re awesome.

  11. We give taxes per annum to the government but who knows the where tax is going whether it’s going to the gov or the politician??

  12. Fiscal responsibility is a lot like physical fitness. Everyone knows it is good for you but no one ever seems to get off the couch. I would love to see more responsible money policy, but I am not holding my breath.

  13. If everyone ran their budget like the federal government we’d all be bankrupt or would have been thrown in jail a long time ago.

    We don’t make a lot of money but we aren’t in debt, we pay our bills on time, we save, we use credit cards to our advantage, we don’t spend beyond our means. Most people don’t seem to be able to do that let alone the govenment.

  14. We now have a two tiered multicultural group.2% control 23% of all the wealth,the gov says 9% unemployment Nation wide,I don’t think so !.More like 15%, 45,750,000 unemployed would pencil out.Foreclosures are up this month alone 8% over the previous month.The Gov says inflation is flat? Baloney! go to the supermarket milk 5 bucks a half gallon,bread 4 bucks a loaf! inflation is being manipulated.Propaganda.And we all need to do our part and spend,spend,spend.With what unemployment? durable goods sales remain down because,now listen close.The Big Banks that the American people Bailed out won’t loan money to the 45,750,000 who need it.But the Gov we have will help the Big Banks.Eight of the major staff of Goldman Sachs now work for us,Ha, Ha, what bubble are they working on now.Professor Olney you are and Economist,and I will ask you once more,what is a living wage for people who put their boots on every day and go to do what it takes,to make ends meet? $8 hr, $15 hr, $25 hr, $35 hr $45 hr, $55 hr, $65 hr. I know you know.Bust a move,tell us, or are you being censored.We the American people are being lied to,manipulated,propagandized to believe in a system that victimizes us.This system is designed for us to produce 5% more than we consume,when we do not the system brakes down.This system will not allow for conservation,it is perverted and fraudulent.Extrapolate out 100 years and calculate the amount of consumption.

  15. Everything is fine and dandy then isn’t it?
    Except where does the federal government get revenue? Oh right… the consumer. And money doesn’t grow on trees, so the money that would be spent to stimulate the economy by taxpayers instead goes to the federal government by more taxes… and we all know how great and efficient that is.

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