Not Spending is Not the Answer

There is a fascinating concept called The Paradox of Thrift developed by John Maynard Keynes. This concept states that in a time of recession if we cease to spend, it will only drive us further into recession. It makes sense right? So in a time of recession when we need to do life smarter, what should we invest in? I say, invest in yourself.



  • Brandon Aguiar
    February 5, 2009 at 10:59 pm

    Great post Jerad. I was thinking about this the other day watching the ‘gloom and doom’ news.

  • Ben
    February 6, 2009 at 11:22 am

    Agreed, the phenomenon of deflation can be just as bad inflation.

  • Kurt - Virginia transplant from modesto
    February 6, 2009 at 12:59 pm

    The economics of John Maynard Keynes are the very reason we are in the mess we are in. The fools steering the ship of state are all followers of his…but for one man named Ron Paul. When we have fake money that is manipulated by the federal reserve ( not federal, no reserves ) we will always have bubbles and recession. We MUST stop spending as the “keeping up with Mr & Mrs Jones” is an unsustainable endeavor. Should we crawl into a bunker and wait for Armageddon? NO! But, we should not delude ourselves with false hope that the very people that created the current economic climate will in any way do anything to fix it. If anything can be learned from history it is that politicians are more likely to betray us than serve us. Spending money on “programs” will not stimulate an economy based on consumerism. What will is more consumerism and to accomplish that we need to have a liquid supply of cash that we can borrow to continue to buy the things we don’t need. Consumer spending IS the answer…but not when it takes inflationary policy of printing more money to do it.

  • Jerad Hill
    February 6, 2009 at 3:29 pm

    Thanks for going totally off topic Kurt. I did not say that people should try to keep up with the Jones’ and I did not say that the answer is to wait for a bail out. I simply touched on an interesting concept. 99.9% of us are to busy working to care to understand all of that nonsense. What is more important then me understanding every issue is my family. To me, my family comes before anything else. I don’t care who is in charge whether it be Ron Paul or Ronald McDonald. I think most half intelligent people out there understand that printing money is just a short term fix. Of course the news is all over it and I’m sure government has some sort of hold on what is said about it. The fact of the matter is that “we the people” voted Obama in to office, though I’m sure you did not vote for Obama, and I didn’t vote at all, we are still citizens of the US, which means what our government does we have to deal with. I am not interested in complaining about it. I see nothing from any of this stimulus so it effects me little to none. What is upsetting is that this liability will be put on our children and grandchildren to repay. But that is a whole other topic.

  • Ched
    February 9, 2009 at 2:41 pm

    Good thoughts!

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