Could More Credit Spending be Good for the Economy?

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Could More Credit Spending be Good for the Economy?

This might seem completely counter intuitive, and exactly how we got ourselves into this mess in the first place; but yes, its true – the U.S. economy would receive a much needed boost if Americans started buying a little more on credit.

Before we move forward, let’s take a quick look back and see why this didn’t work the first time. To keep this short, Americans were spending well beyond their means, using credit cards as gift cards, with little foresight and no real plans on how to pay all the junk off in the long run. Coupled with the mortgage crisis and housing market collapse, and the U.S. had a perfect storm of economic problems that almost toppled the economy.

Obviously, when economists and Wall Street scream “depression” and “crisis” and banks start toppling like dominos, people listen and stop spending their money. This only exacerbates the problem (because how does an economy run if no one is buying anything?) and presto; we have a stagnant economy receding faster than Joe Biden’s hairline.

So how do we fix it? Foreclose on all homes in Florida! No. Jobs! Yes, but how if we can’t pay current employees? The answer, and Americans will love this, is to spend more money!

Our economy runs on people buying junk! 70% of the U.S. economy is predicated on consumer spending. Understandably, with a record high of over a trillion dollars in credit card debt, and an economic crisis to show for it, Americans have become more tight-fisted and have been paying off their debt.

Amazingly, we’ve managed to cut the country’s credit card debt by over 20% in just two years. While we should certainly continue to live within our means and continue to pay off the debt, putting a little more money into the economy is the only way to return to normalcy.

Spending more money will lead to more jobs, which will lead to even more jobs. People with jobs can afford mortgages, which will then help with this pesky housing issue.

Nothing will solve the problems we have overnight, and by no means am I suggesting that you go spend more than you can afford. But pumping more money back into the economy will surely help. So, go buy yourself a lollipop; you deserve it. Or maybe a DVD player, instead.