Spending = Income !
I don’t know why anyone has a problem seeing that. But, many of us are so caught up in the thought that saving must be a good thing that we sometimes miss it. Saving is what the virtuous do. Spending, on the other hand, must be a bad thing. That is what the reckless do. Except, of course, if the spending can be classed as “investment”. Then it might be classed as a good thing too! Income, naturally, is a good thing. At least we all agree on that. Everyone needs some income to survive.
It should be a self-evident ‘truism’ that everyone, everywhere, who has earned any money has done so only because someone else has made a decision to spend some money. If people are not earning enough it must follow this is because other people are not spending enough. Spending may be “investing” in new infrastructure or, equally, it may be simply you or I just going down to the pub and buying a pint or two!
Of course, if anyone wants to put aside some of their hard earned money then there is no reason why they should not. But, as a simple matter of accountancy, it needs to be recognised, by all, that if someone is spending less than they earn someone else has to spend more, otherwise our economy will spiral downwards as it has in the Eurozone. The foreign sector in the UK spend less than it earns. Overseas buyers spend less on buying products from the UK, our exports, than sellers earn from sales of products to the UK , our imports. That needs to be made up for.
Many baby boomers are nearing retirement. They are spending less than they earn, as they put aside money into their pension funds. More generally, the private domestic sector needs to net save to clear past debts and avoid new ones. That needs to be compensated for too.
That has to be down to Government. There is no one else. It needs to spend more than it earns, ie run a deficit, to “balance the books”. It is all so simple, and so obvious, but many of us are just so conditioned to be the way we are that we can be blind to what should be apparent to an intelligent 5 year old and mess up our economies as a consequence.