The NEWS last night discussed how consumers were tightening down their spending – starting to only buy what was needed to survive – such as food.
This causes greater problems for the economy. As people spend less, more companies will lose money and lay more people off, which means even less money to go around.
The circulation of money is what keeps the economy moving. As you can surmise, the more afraid people become, the less money circulates. People want to hang on to what they have.
This is the reason why analysts talk about the ‘consumer confidence index’ so much.
So what is to be done? The government has to find a way to make people, particularly consumers, less afraid.
At the same time, the banks are also afraid, making it harder for businesses to get necessary loans to survive and grow. Business needs to grow and if it cannot get the capital it needs to grow, it will be forced to lay people off, etc.
As you can see this is a big problem. Our new president will need to tackle this problem head on. If he fails, the world economy will continue to suffer. It is difficult to predict the outcome – at this point.
For the rich, they have pleny of money to ride out the tough economic times, they will not suffer so much. But the common man and woman, will not have vast reserved to fall back on. When their jobs and savings run out, what will they do?
The time is now and taking action is key? But what action should you take? As always, information is needed! As they say, knowledge is power. How will you and I get through these times?