Freedom To Spend Act

I have been reading an interisting opinion lately of someone who proposes the
“Freedom to spend act”. At first, he says the underlying theme of this economic crisis is the lack in confidence. Many are simply waiting for the sentiment of all that it’s OK and the people need to move forward.
Secondly, both sides of the isle of the U.S. government, Democrat and Republican, have ideologies that are limiting their scope on how to handle the financial crisis according to him.
Well, I wrote the exact same things some weeks ago so I defenitely agree with him. But further in his text, he pretends to have an idea about how to restore confidense.

He says that the government must give every American family $20,000 and individual $10,000 to spend freely as they wish. He thinks that if you give a substantial amount of cash to “the people”, they will spend, pay off credit cards, pay their mortgages, buy cars and homes, they’ll go on vacations, they will give to charities, they’ll invest again and what’s more important, they’ll be “confident” again to move America forward.

I agree that that the government must undertake actions because the problem won’t be solved by its own but this is a few steps too far. First of all, where will the governement get that much money? And I am certain that the governemnt won’t see even half the money back through taxes and so on, so I think that we will have an even bigger problem in the future.

In my opionin, it would be more achievable to stimulate the employment but it would be too easy to eliminate this proposal focusing on this part. I think there are some good parts in his Freedom to spend act too. The only solution is indeed to invest a huge amount of money in the economy in order to give the people a clear sign that the government itself believes it will get better. While doing it, we are making the people part of the solution, restoring their confidence and half the problem will be solved by then.

Source: http://economix.blogs.nytimes.com/2009/03/12/david-swensen-says-buy/#comment-42765 (the second comment)