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The Confidence & Spending Crisis: A Modest Proposal

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The latest consumer confidence numbers are raising fears that the unwashed masses of the what this once American republic—convinced, perhaps, that Heath Ledger’s death portends bad signs for our economic health—might not spend their allegedly economically stimulating government checks quickly enough or in the right ways. They may, it is feared, decide to save for a rainy day or reduce their own leverage for fears that an economic downturn would reduce their earnings. Quite clearly this would undermine the government’s plans.
Here are the facts: lately, American spending has not grown as fast as our spending power. Indeed, the evidence indicates that it is being converted to saving power, which means that the benefits of the stimulus package to the consumer sector of the economy—which, somehow, means the people who take money from the consumer in exchange for stuff—may be delayed. But this is only because our great and bright have not thought this problem through. The solution was under our Christmas trees this winter, and we only need eyes to see it.
We’re talking, of course, about gift cards. Instead of sending redistribution rebate checks to the people, the government should consider sending gift cards with short expiration dates. Ninety days might do the trick. (Money unspent could be applied to, well, most likely a new round of discount cards but it’s better not to reveal that ahead of time.) It would also save precious time that might otherwise be wasted depositing checks in the bank, where they might be tempted to deposit them in a savings account rather than a checking account.
Perhaps we underestimate our government. It could be that this is exactly what government plans to do anyway. Reducing interest rates should have the marginal effect of reducing savings rates, and increasing inflation will be a multiplier on this effect. At this point, the dollar itself should probably be looked at as a gift card that ought to be spent immediately to avoid its expiration date.
New dip in US consumer confidence [BBC]