I don’t know where to start! All economies are about “people spending money”! ‘People’ only get money in the first place when someone else spends it on their wages or salary, buys something off them or it’s transferred as a gift. Then they either spend money, themselves, or they save it. If they spend, it usually creates work for others. If they don’t spend , it doesn’t. Governments have to borrow and spend it on their behalf, which only increases the National debt! Isn’t that supposed to be a bad thing?
I can’t find any direct quote that Christine Lagarde expressed these precise words. However a quick Google of the phrase shows the same story, with those exact same words, reported by many and various organisations worldwide. So they must have been part of an IMF press release.
However, she is reported as saying “The UK has to export more, the UK has to invest more” . This sort of thing has been said for as long as I can remember. It is meaningless drivel. British businesses will only export more if they have customers in their export markets who are spending more. They will only invest more if it is to meet the demand of all customers, wherever they are, who are spending more.
It doesn’t make any sense whatsoever for British business to invest to meet the demands, ( or should that be the non-demands?) of the non-spenders. I wouldn’t do it, Christine Lagarde wouldn’t do it, so why does she suggest it?
It would all be quite comical if Christine Lagarde weren’t the big chief of the IMF!
Is it any wonder Greece and Spain are in the position there are in, when they are forced to take advice from the IMF and Christine Lagarde?
Modern Monetary Theory: Real Economics 
This is all down to supply-side rhetoric. The usual Says Law nonsense that suggests you have to produce first if you want to consume.
It is of course nonsense in a monetary economy, where what gets produced first is money! By banks.
And if your private sector wants to save, or your external sector wants to save (i.e. importing), then there is only one place those savings can go, and that means government *must* be the borrower of last resort – assuming you want to avoid GDP collapsing Greek style.
Good post. What you write all sounds very logical and its hard to disagree with. I just wonder if the people who push the same line as the IMF actually believe what they are saying?
The phrase came from the headline. One thing you have to keep in mind is that the author of a newspaper article does not do the headline, that is done by an editor. Those editors are only interested in getting you to read the article, and not any form of factual accuracy.