I have to spend $75.00 to get someone out to repair the air condition system
By savypat
@savypat (20216)
United States
May 19, 2009 9:52am CST
I woke up this morning wondering just where I could get this money and than I started thinking of all the places that money would go once I had released it into the world.
The person I give it to may spend it on groceries, from there it goes to pay wages of the employees of all who provide the groceries. And so on and so on. My conclusion was that I could surely find someway to get this money together, it's worth any effort I have to make. It sure made spending it much easier. Have you ever thought about the money you spend this way?
1 person likes this
5 responses
@scheng1 (24650)
• Singapore
19 May 09
Hi Savypat, you have touched on a very basis economic concept "Money Multiplier", or "Money Creation".
Assuming that you take out $100 from the bank, you use $100 to pay the grocery. The grocery shop uses $80 to pay salary to the cashier, and keep $20 in the bank (once goes back to the bank, it is no longer circulating to create more money). The cashier uses $64 to pay for gas, and save $16 in bank. So the $100 generates the value of $100 + $80 + $64 so far. The process will go on till someone saves the money in the bank.
The central bank uses this concept when they adjust the interest rate, and decide to issue government bond. When the economy is in a crisis, the government will create more jobs and spend more money, so that we all have money to spend, and create more jobs for other people.
1 person likes this
@scheng1 (24650)
• Singapore
20 May 09
Hi Savypat, in this recession, I am reluctant to spend money. I know that when everyone holds this attitude, the country never pulls out from recession. So I hope that others can spend more, while I save my money.
It's just selfish thinking on my part. Anyway, I feel that it is government's job to spend more. Government is opening a lot of jobs in the civil service, to reduce unemployment. My friends in the civil services are not happy about it, more people coming in means lesser chance of promotion.
@UK_Shree (3603)
•
19 May 09
That is a really great way of thinking when you need to spend money especially when it is a signifcant amount of money, which in my opinion, 75 dollars is. I have never done this myself, and I bet most people haven't either. I suppose we never think about the 'other side' when we are parting with something that we would rather hold onto, or would like more of!
1 person likes this
@bubblyapple (2653)
• Philippines
20 May 09
Sometimes I wonder where people spend their money as well. But I don't have much time spared to think about that too. I am already busy thinking about where I spend my money! :)
@paula27661 (15811)
• Australia
20 May 09
It's an interesting discussion savypat. I guess we are so used to spending money nowadays that we don't give any thought to where it actually goes when it leaves us and how it effects others. It would be a novel way of looking at our hard earned cash if we were to think about the difference every sum of money we spend would actually make.
