A primer on Keynsian economics...

[ThriftoRama]

It’s your fault. Part of it is, anyway. You, the American consumer, spent too much money. You bought too much house, took on too much debt and generally lived beyond your means. Your free-spending ways helped cause the worst financial crisis since the Great Depression.
And now you’re going to have to do your part to end the crisis. How? By spending. Enough already with the saving that many of you have suddenly begun doing. This very moment, Congress and President Obama are preparing to send you a tax rebate, to inspire you to stimulate the economy. So go out and stimulate. Spend as if the future of your country depended on it.

John Maynard Keynes, the great 20th-century economist, would have appreciated the apparent absurdity in these mixed messages. He coined a phrase, “the paradox of thrift,” to point out that what was rational for an individual during hard times — saving money — could be ruinous for an entire economy. Eventually, many of the savers may end up out of work because everyone else is saving, too.

http://www.nytimes.com/2009/02/11/bu...l?ref=business

[EEinNJ]

This idea is nonsense. There is a certain baseline of spending we all have to do- food, taxes, mortgage or rent, gas, healthcare. The problem of the American economy has been one of OVERconsumption, fueled by credit and a negative saving rate. It is not sustainable, and the bubble has burst. If people live within their means, the economy will correct to stable levels.
And another recent report that headlined that the savings rate had gone up was misinformation- in reality, there was just less debt. That's a good thing. If Americans bought houses they could afford, actually paid their mortgages instead of defaulting, and didn't buy crap from China on credit cards or huge gas guzzling SUV's we wouldn't be in this mess fueled by Wall Street greed!