The Irrelevancy of the Paradox of Thrift

February 11, 2009

USThrift Blog is back from a long winter’s nap and the birth a new little Wilcox.

This post has been published by Forbes. It argues that American households are not stifling economic recovery by saving too much and that public policies designed to increase consumer spending are misguided.


  1. Hello Ron,

    You have very well written this article and American Optimists. I agree that real long term solution to this problem is to come out of the materialism/consumerism and have a habit to save some money for future uncertainities. However, I think it is easy to change processes, structures, laws etc…but it is very difficult to change perceptions and behaviour of people. I dont know how/when Americans will value their freedom (financial) more then a car, a poker table and a TV…

  2. All of those “smart people” in the Obama administration are stuck in a Keynesian mindset. Obama said himself, the point of stimulus is to spend. They honestly believe spending will work.

    As for all of the partisan goodies that are in the bill, why is anyone surprised? For all of Obama’s lofty rhetoric, he has always been a down the line partisan Democrat.

  3. Rather than commenting on the article which as usual is full of interesting insights, I just wanted say congratulations on your new economic stimulus package 🙂 Pictures forthcoming I hope!

  4. Spending may be needed despite the irrelevance of the “paradox of thrift”. Yet economists seem adamant in funneling stimulus through a very few mega-entities. This seems to violate fundamental economic theory and common sense.

    Future taxes will repay the stimulus. Let’s say it comes to $3,333 per current citizen. So send that loan check now — to the individual. If we assume 100 million households at $10,000 each, they will allocate that money, per market theory, the way it needs to be. That lets the zombies die now instead of being continuous ratholes.

    We were happy to pay 20% interest on credit cards to offset predicted losses from “freeloaders”. And it seems that income tax collection is a safer bet than credit collection. So I fail to see the claim that such a dispursement would be unfair to those “who pay their taxes”. It certainly seems fairer and more rational than giving hundreds of billions to a few dozen entities with worse than checkered pasts.

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