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Recycle Your Money

Nov 8, 2011   [permalink]

I've seen a recurring theme recently on facebook, newspapers, and the like, suggesting that this holiday gift-giving season people in the "99%" should support local businesses and should give homemade gifts.

I think the former idea -- supporting local businesses -- is great. Small businesses are the backbone of the economy, so helping them helps everyone and saves civilization as we know it.

It's the latter idea that has me scratching my head. The "99%" / "Occupy" movement is ostensibly about wanting the economy to be better than it is. That's cool. Good goal. The problem is that deliberately withholding money from businesses is actually harmful to the economy -- the very economy that the 99% movement seeks to improve.

Playing armchair economist here, the economy requires money changing hands. It has to flow; it has to move from, say, Person A to the grocery store for a loaf of bread, from the store to the baker, from the baker to the seller of the wheat -- who in turn recycles that money by buying, say, ebooks to read from their favorite ebook purveyor (say, ahem, ReAnimus Press). :) Who in turn recycles that money by paying it to workers and authors, who in turn recycle the money to buy bread, and so on and so on, round and round it goes.

The engine of the economy is about how fast money turns over. In a slow economy, the money doesn't get recycled enough. People sit on it. Hoard it. That keeps it out of circulation (literally).

So, for the economy to get better, everyone needs to Recycle Their Money.

Obviously that's hard if you don't have it, so I'm certainly not urging anyone lacking a home or food to spend on costly gifts for others. But 99% of the US population is not at that level; there's money there that could be flowing. Deliberately choosing to sit on cash is harmful to the currently-slow economy.

Now to be clear, I'm not saying "Go out to Mega-Lo-Mart and buy cheap Chinese stuff." That's a whole separate argument. I'm saying keep your money flowing. Recycle it. (And as for the Chinese question, that's a question of whether you want to help the Chinese economy or not. I'm sure the poor Chinese folks appreciate US money flowing in to help them increase their standard of living; and there's something to be said for "A rising tide floats all boats." But that may take decades, and it might be better to get the US economy back on a sound footing first, rather than dragging it down to boost theirs. Not an easy question, really, in the grand scheme of things.) Nor am I saying, "Spend more at a local business even though they cost more, because they keep the money in the US." (There's something to be said for competition, which keeps costs down. Like I said, that's not an easy question.)

But it's also not related to my point. Which is, be (ahem) "green" and Recycle Your Money. :) That'll help everyone and, in turn, you.

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