I keep running across the idea that consumer spending is the thing that “runs” the economy. Boost consumer spending and you save the day.
That isn’t the view of the economic school that I’ve been convinced of for many years. The Austrian School of economics is the one that makes sense to me. Here are a couple of articles explaining why consumer spending is not “the” savior, and how saving in the aftermath of an exploded boom is a good thing.
Consumers Don’t Cause Recessions by Robert P. Murphy
The Importance of Capital Theory by Robert P. Murphy
Also troubling in regard to our present financial damages are statements to the effect: “It’s de-regulation that lead to the finanacial crisis” and “The crisis has proved laissez-faire economics to be a failure”, as if the market has actually been de-regulated or that we’ve been living in a laissez-faire economy.
I highly recommend the following to correct that particular misunderstanding:
The Myth that Laissez Faire Is Responsible for Our Financial Crisis by George Reisman
And how about this one on how the present financial crisis was the result of government intervention in the economy:
The Government Did It by Yaron Brooke