How Our Economy Got This Way
by This will inform you on how our economy has gotten the way it is now and what you can do as an individual to help.
The Situation Were In
The Economy is slowly declining because people aren’t spending. When our economy is doing well people spend freely because they feel that they can make the money back easily without much problems. They know there’s money to be made out there and they figure they can make more if they need it. When our economy started declining I started looking at the facts. I’m still in school so money is tight and the thought crossed my mind “It wasn’t this way in the past, Why is it this way now?” After tossing and turning and clicking the mouse a million times I’ve learned why and I’m here to share it with you.
The Basics
Our economy is measured by GPD. The GPD is the tool used to measure the health of our economy. The GPD is figured like this. Consumers + Investments + Government Spending (+/-) Trading
Consumers- We are the consumers. The more money we spend helps the GPD making our economy healthier. if you remember the government gave money to the public a couple years back to stimulate the economy. Well, that was their plan. You see people took the money and paid off debt and saved the rest. This doesn’t help the economy. The more money you put in the bank the less that’s circulating. The more we spend the better our economy gets.
Investments- Investments are important because they help keep the economy at it’s best. When we stop spending this goes way down harming our economy. When the economy gets worse were like, I’m saving not spending cause the economy is doing awful. Don’t deny it… you know I’m right about that. When we stop spending it also means were not looking to get into anymore loans. When we stop taking out loans it hurts the Investment and consumers aspect of this.
Government Spending- When the Government sees something like this coming they try to stop it. They tried by giving back money but failed. Now there’s only one solution left, I don’t like it and I know you won’t either but we have to Raise Taxes. Here’s why, if the government raises the taxes then they are taking the money that no one is willing to spend and spending it. When they spend it the GPD goes up and the amount of money circulating that can be made increases. When the amount of money increases people feel better about going and buying that big screen TV or a house, or car etc… Thus it jump starts our economy.
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Post CommentWalter Holstad
On November 30, 2008 at 9:21 pm
I think you mean GDP not GPD but I like it.
ladybaby
On May 11, 2009 at 5:04 pm
That is a good write. That is how the government operates it. I wish you would click onto, “THE STORY OF STUFF” and watch the free video. It will amaze you. We have become such a consumer world, that we are killing ourselves, with poisons, and pollutions. We accumulate so much stuff, and keep buying because things are MADE to break down so people will buy more. It is a destructive merry-go-round. When I was young we could buy an appliance that would last for years. And if things broke down, people had jobs to FIX them. Now no one fixes them, we just toss them out and buy another one. It is such a WASTE. Buying more things to get the economy going is simply digging the hole deeper.
good article however, helps to make the reader understand the process going on.
Richard
On October 16, 2009 at 4:41 pm
Every Dollar You Spend
Financial planning expert Jonathan Pond has often observed that “your best dollar is the one you don’t spend”. From the point of view of securing your and your family’s futures, there could not be a more accurate statement. Every time you spend a dollar, you give up the future value of that dollar. You lose the power that comes from possessing a sum of money. You also pay a very high price: you pay the “opportunity cost” of using that dollar in a better way. An example, though quite painful, will help you to see this concept in action in a way I assure you that you will not forget.
Had you invested about $10,000 in stock of chewing gum maker William Wrigley in April, 1986, your investment would have grown to $265,000 by early 2008. You would have been receiving cash dividends of over $7,000 per year. Yes, your annual cash receipts would have been 70% of your original investment. It does not end there. Earlier this year, Warren Buffett and Nestle purchased William Wrigley, Jr. Company for $80 cash per share. Warren and Nestle would have sent you a check for $360,000. This is quite a result from a $10,000 investment in a company that was well known in 1986.
How did you spend the $10,000 you had during the mid 1980’s? On cars, clothes, lunches, dinners, trips you can’t remember, staying at overpriced hotels and renting cars? Look around your house, in the basement and in the closets. That’s what you spent it on, that is, what’s not already gone to some poor landfill. Neither Buffett nor Nestle would send you a check for any of that.
To have made the Wrigley score, you needn’t have had the $10,000 all at once. You could have bought $500 worth and made additions through Wrigley’s dividend reinvestment plan. Many great companies had them then and have them now. Wrigley stock returned 16% or more per year for all the years from 1986 through the Buffett/Nestle buyout.
You don’t lose $1 million by carelessly misplacing it. You lose it $50 and $100 at a time, buying things you don’t really want and certainly don’t really need. You lose that future $1 million (or perhaps much more) with every dollar you spend.
Sam
On March 17, 2011 at 12:20 am
If what you say, the government needs to raise taxes so they have money to spend, which will cause the economy to improve, thereby making us happy and want to spend,
then why aren’t we gitty with excitement?
They have spent 758 billion and we are worse off. How much do they need to spend to make our economy better?
You are all wet!!!!!!
Sam