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Subject:  Re: Not everyone gets a tax rebate Date:  6/12/2001  6:49 PM
Author:  sliminfinite Number:  153255 of 910561

Frecs and co: "Personally, I plan to use my rebate in a way I consider wise (or Foolish), and that is paying off debt and thus saving myself a few dollars of interest.

Yeah, me too. Won't that just blow a huge hole in their "save-the-economy-by-giving-people-money-to-spend" plan. Especially if a large number of people do likewise. "

Hi Frecs,

Actually, this is part of the debate I don't understand. The only way you really take money out of the economy is to literally put it under your mattress or use it to light your charcoal grill or something. If you deposit your money in a bank they lend it out, if you buy stock with it the person selling you the stock now has the money, if you buy a bond with it the entity issuing the bond uses the money for something. It's all a big circle.

In my eyes, giving people loans for houses or lending to a start-up business or giving your municipality money to build a road is a very productive use of capital. Just because it doesn't get spent at Best Buy for a new tv or on X number of drinks at the local pub doesn't make it any less stimulating to the economy.

In fact, just as many economists are worried about the low savings rate of the US populous as are worried about how many low-priced consumer goods were sold this month. Concentration of capital is needed to stimulate economic progress, and whether you create that by having lots of people buy chewing gum at the store and have Wrigley allocate the money or whether you give large chunks over to a bank, a market maker or a government entity it still finds it's way back through the economy to (hopefully) end up in places like our paychecks.

I guess I just don't understand how people saving this money could be bad for the economy. Though, with how much the press at large encourages us to spend our money frivolously instead of saving and investing it wisely it doesn't really surprise me.



ps Anyhow, I don't think you have to worry about even 10% of the American public saving their checks...
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