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There is nothing inherently wrong with consumption. Any strong economy must have a balance of consumption and savings (investment). Without consumption there is
by samd 16y ago
There is nothing inherently wrong with consumption. Any strong economy must have a balance of consumption and savings (investment). Without consumption there is no income for businesses, and without investment there is no growth of businesses. Depending on the economic situation it can be beneficial for the government/Fed to either encourage increased consumption or investment. Giving poor people money is an excellent way to increase consumption because poor people tend to spend most of their income rather than save. In our current economic situation, with consumers cutting spending and thus causing businesses to cut production and jobs, giving away money to poor people would help to increase consumption and thus put people back to work. This is why government's around the world passed stimulus packages in the wake of the financial crisis. So don't demonize people for spending money, it's an essential part of our economy.