US & Japanese Workers as Spenders or Savers

["John Gelles" <johng@xxxxxxxxxx>]

    Many economists and "experts" hope for consumers
    to spend enough out of earnings and loans to finance
    growth at a rate above 2.5%, hold unemployment
    below 4.5%, ensure a higher minimum standard of
    living from one year to the next, repair environmental
    damage, improve society's morale and morals, and
    otherwise accomplish by shopping what lawmakers
    cannot do deliberately.

    Yet these economists and "experts" know that
    consumer earnings, when they begin to fall, tend to
    fall even more, as sales, profits and wages also fall
    for lack of conusmer spending out of earnings.

    And they know, too, that loans as a source of
    consumer spending, absorb consumer earnings to
    repay debt with interest.

    When nations, like the US and Japan, start with an
    abnormally high debt and try to spend their way to
    prosperity, consumers are up against formidable
    barriers, including an imperative to produce at as
    low a cost as possible and another imperative to
    climb out of debt by reducing spending, if they
    desire to remain solvent.

    It is also true and agreed that lower interest rates
    make consumer spending a more viable plan for
    economic growth than higher rates. But any
    positive rate of interest together with high debt
    by consumers (relative to annual earnings) leaves
    consumers in a poor position to spend --
    especially when so many would rather save and
    invest (or just redice the burden of debt).

    So, why can't more of us on PKT admit that it
    is government spending and lending we seek to
    encourage -- not consumer spending?

    In fact, we should applaud low spending by
    consumers who can be convinced to be frugal.

    Moreover, government spending should not
    be constrained except by fear of hyperinflation.

    It should definitely not be held hostage to tax
    collections.

    Government has the power and obligation to
    create new (high power) money, as it spends
    the nation's way to greater prosperity -- for as
    long as the capacity to produce real wealth
    increases as deferred spending increases in
    the form of inflation indexed savings accounts.

            John Gelles