People are funny, many time people don’t see beyond the surface on matters.  For instance, I have friends that get mad (literally mad) when the see a “supposedly” rich person flaunt their fancy cars, diamonds and whatever else a rich person might own.  Not me though, I want rich people to buy things and spend money, and here’s why!

When the rich (or those with high incomes) spend money, it makes the market more liquid and gives people jobs.  Yep, their spending might just keep you employed, not that they take that into consideration!

The new fancy car that a rich person buys means that a sale person earned a commission, sales taxes were paid, car factory workers, office workers, the trucker that transported the car to the dealer, and all the peripheral companies that contributed parts to the car (tires, brakes, etc) all pay their workers with that money from that sale, again all of the above is oblivious to most rich people but there nevertheless.  You see, when rich people spend money, that means that money is injected back into the economy and people get paid!  Obviously (or hopefully) the rich person enjoys his/her spending so much that they keep on spending it (responsibly of course).  This is a positive thing folks.

Now let’s consider the miserly rich, those that die with tens of millions in a safe deposit box at the bank or worse still, in a safe at their home.

The money hoarding rich represents a constriction of money in the economy, making it illiquid.  They are like a huge money hole where the money gets tied up and a contraction happens because the liquidity of the money supply is reduced.  Can you image what would happen if the top 1% decided to save all of their money instead of spending it.  Remembering that the top 1% has 40% of the wealth!  Shoot, if they were to all, in unison, stop spending money on anything and practiced frugality, our country would be in a Great Recession, and possible a Great Depression.  And nobody want something like that to happen!

You think it’s not possible, but there are people like this.  Even one of my financial heroes (Warren Buffett) is tight with this money, too tight in fact, in my opinion!

Besides, if you have the money why not spend it to enjoy life at least a little bit?  Are you saving it so that when you die someday, you’ll have a coffin full of money?  Not me!  I’m not saying to go into debt, but a reasonable amount of spending by the rich is a very positive thing, especially during recessions!  In fact, even though I’m not rich, I actually tried to spend more money during the “Great Recession”!  While my spending alone didn’t make much of an impact, most likely there were others like me that also spent during the “Great Recession”, I’m sure my little extra spending when combined with other like me, had a positive impact!  So you guys own me (just kidding)…

Bests,

Don