Question by iamtruman: How will government spending and consumer spending improve our economy?
Fiscal deficit will likely to result in more borrowing by U.S government in the form of issuing more treasury bills and consumer spending with borrowing money will likely to result in more debt which they can’t afford to pay back. Japan has trillions of savings and Japanese government encourages consumer spending to stimulate their economy. Our savings rate is less than one percent, both our government and people are broke so the only way we can spend is by adding more debt which got us into this mess to begin with.
Best answer:
Answer by SDD
Government spending cannot “improve our economy” because every cent that the government spends has to first be taken or borrowed from someone in the private sector, who now has that much less to spend/invest. Only if you posit that that money would otherwise be buried in someone’s back yard could that be true.
You’re wrong about the personal savings rate, though. It’s about 6%
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