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The Economy, Credit and Trickle Down Economics (The Ripple Effect)
When people spend money, someone is affected. If you spend one dollar or a million, spending money creates cash flow, cash flow creates jobs. The economy is driven by the exchange of goods and services and the movement of money. Even money is a product, when credit is too expensive in the form of higher rates and fees, consumer spending is limited, especially for larger purchases. The current credit crisis is an example of that. When consumer choices are limited because credit is not available for larger purchases, it can have a devastating effect on all types of businesses associated with these products. When a business succeeds, we all benefit. A particular business may need a supplier or shipper, a printer, or any number of other business services. All these companies benefit, as do their employees and the local economy where that company is located. An example of this is a company with 250 or 500 or any number of employees in Anytown USA. When these employees go to lunch, buy gas for their car, shop at local stores near work, etc. it has a positive effect on the local economy. Spending money is extremely important to start the economy, which is why every news station in the country reports year-end sales figures for the holidays. Because it affects every company that manufactures, supplies, sells, repairs, cleans, installs or advertises these products. If companies don’t make enough profit, they lay off workers, fewer workers means less money to spend and in turn more lost jobs. Many different types of businesses rely on each other to survive. Let’s say a very large company does business with several hundred other companies, such as Wal-Mart or General Motors. Now think about all those employees and all the various products and services they spend their money on. This can only do good things for the economy, however if any large part of the money flow stops, well, big problems can arise, just like the problems our economy is facing now.
Now let’s look at the rich and their effect on leakage. If a person, rich or poor or anyone in between, spends money, someone benefits, but let’s look at it from the top down. Some rich person owns his own company or several companies and employs xnumber of people. These employees pay taxes and spend money on all necessary living expenses, and someone else earns from that money. Also, this rich man may own a house or two or three, and when he buys a house or a car, he exchanges money, pays more taxes and earns income and so on. What about maintaining his house and car? Painting, roofing, carpet and floor cleaning, home and car maintenance, car mechanic, car wash, tires. The list goes on and on, so I really don’t think anyone should be upset when the rich get even richer, because they will most likely spend more and have a positive financial impact. All the companies that help maintain their assets and those people who work for them get benefits and in turn employ others who also spend money and pay taxes. So a rich person automatically redistributes wealth every time he spends money. Creating wealth is why most people have jobs in the first place. Companies do not start from nothing, they are started and run by people, and if they are successful companies, someone may have become rich because of it. That wealth is spent and maybe that rich person decides to start another company or let someone else start their own business and the cycle of trickle down starts all over again, so thank some rich person that you have a business in the first place. All the places where you spend your money, someone is making money and you are supporting business and business. The economy works well when we spend money, the more we spend, the more everyone benefits. TRICKLE DOWN IS TRICKLE DOWN. It is an economic fact, even if the rich are getting richer and the poor are getting poorer, money still flows from the top to the bottom. If an area has businesses, it also has employees who spend money on food, housing, transportation, entertainment, and many other things. So consider the benefits of large businesses increasing revenue for many other smaller businesses nearby. Many companies do business with each other and this improves the economic situation for everyone, so go spend some money.
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#Economy #Credit #Trickle #Economics #Ripple #Effect