End the Recession: Throw Us All a Grand

Banks just horde cash; citizens will spend it
By Jason Farago,  Newser Staff
Posted Dec 10, 2008 11:22 AM CST
A direct gift of around $1,500 would do much more to hasten the end of the recession than more money for banks, writes Simon Jenkins.   (©swanksalot)
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(Newser) – The financial crisis has begotten a global recession, but government leaders across the world are still concentrating their efforts on fixing the banking system. That's a waste of time, writes Simon Jenkins; the banks only horde cash to save themselves and ride out the downturn. For the Guardian columnist, the best solution is the Keynesian classic of showering the people with cash—say, 1000 pounds, or $1500, a person.

The US tried a small $300 tax rebate earlier this year, but it was too small and ended up "vanishing into savings." Instead, governments need to give out big gift vouchers that must be spent before an expiration date, making citizens spend and not save. Dropping money from the sky might seem classless, Jenkins admits. But "there is no shortage of requisite money; we know because anyone can get it if a banker."