This is an extremely wild idea that may just work. Well, probably not, but the author and the grad student make a very valid point that an important, possibly the most important, problem right now is the very low marginal propensity to consume (yes I did use an econ vocab word). People are not spending money that they earn out of fear, which only furthers the problem. By instituting a negative interest rate or a carrying tax on money (described in the update section of the article), people would be nearly forced to spend. And isn't this what we want? When people don’t spend, they are only going to force more companies to fail and lay off more workers, who in turn won’t spend and perpetuate the cycle. The year 2005 had a negative savings rate, and yet we (sitting happily in S. Florida) prospered the most. Maybe it is time to abandon conventional thinking and use the same nontraditional logic that got us in this mess to get us out of this mess.
Posts
This is an extremely wild idea that may just work. Well, probably not, but the author and the grad student make a very valid point that an important, possibly the most important, problem right now is the very low marginal propensity to consume (yes I did use an econ vocab word). People are not spending money that they earn out of fear, which only furthers the problem. By instituting a negative interest rate or a carrying tax on money (described in the update section of the article), people would be nearly forced to spend. And isn't this what we want? When people don’t spend, they are only going to force more companies to fail and lay off more workers, who in turn won’t spend and perpetuate the cycle. The year 2005 had a negative savings rate, and yet we (sitting happily in S. Florida) prospered the most. Maybe it is time to abandon conventional thinking and use the same nontraditional logic that got us in this mess to get us out of this mess.
ReplyDelete