[Sapio]

bootlegga wrote:

Funny, didn't Bush say the same thing after 9/11? If you don't shop, the terrorists win...or something along those lines.

yes indeed, it is funny how similar Obama is becoming to Bush. Well not so funny for me. I said this before he was elected.

[bootlegga]

Well, technically, both were/are right.

To avoid a recession, people have to spend money. The problem is people get scared they will lose their job, and stop spending. Then because of the downturn in consumer spending, people do lose their jobs, so people further tighten spending and more people lose their jobs. It's becomes a vicious catch-22.

[Pseudonym]

bootlegga wrote:

Well, technically, both were/are right.

To avoid a recession, people have to spend money. The problem is people get scared they will lose their job, and stop spending. Then because of the downturn in consumer spending, people do lose their jobs, so people further tighten spending and more people lose their jobs. It's becomes a vicious catch-22.

Correction = To avoid a recession, people need to invest in capital, which requires saving.
The problem with a lot of modern economics is that their is too much focus purely on consumption, which ends up with people living from paycheck to paycheck. Then when something goes wrong, there is nothing left to fall back on except government, which screws everything up even more.