Thursday, 2 February 2012

How to Stimulate the Economy by Harry Teh

How to Stimulate the Economy

by Harry Teh

Yes yes, times are bad... Indeed but what are u doing to stimulate the economy? A lot of people would say... These are the times to start saving money and securing the egg baskets... (Hide the money at home!!) but alas.... should everyone start thinking like that... let's see the progression from one simple act of not spending.

Vicious Hoarding Cycle
You... do not spend... hoard money... Times are bad... so u stop going to mamak.. Mamak no business coz more ppl are staying home instead.. so he has to cancel order from his supplier coz less business.. His supplier decides to charge more since there are less orders

1.       Prices of goods go up... Supplier decides since he cannot support his fleet because of less orders, decides to cut back on drivers;
2.       Job cuts for poor driver...tells his family, no more job so cannot go shopping for Christmas..
3.       Less people in this category go shopping... shopping malls see no business.
4.       Cannot pay rent... chup lup.. (Bankrupt) lesser imports of goods and movement of goods from factories..
5.       Factories see so little orders... force workers to take early severance package..
They go home and repeat the whole hoarding cycle... but multiply it by hundreds of thousands now the world over and walla...
Your simple act of hoarding money when times are bad has just caused a recession!

So... our country leaders have deemed this the perfect time to start a stimulus by...
1.       Cutting down on Interest Rates... which means your money is better used to stimulate the micro economy, than being hoarded in the treasury...
2.       They cut down on BLR thus freeing up some few hundred here and there from your housing instalments.
3.       They cut down on your EPF contributions to free up more money..

All these couple of hundred are for what u ask? Not to hoard la.. (See vicious hoarding cycle above)...
So since the season to be merry is here, I am not asking you to PK yourself by shopping till u have no money left to eat... but go to your favourite mamak.. get that mee goreng.. Order that chicken rice... Watch that movie... Go get that Tattoo you've always wanted! And since prices of shares are hitting rock bottom... buy that blue chip and set it aside for your children as this recession cycle comes about only in 10yr cycles!!
Your economy needs u... your people need u. Do the simple things that make the season merry with your family. Move the economy... by stimulating mouthful at a time.
The Vicious cycle... it’s all about the Mamak and the Mee Goreng. It starts from ground up and not the diamonds and fast cars. It’s all about the everyday you and me, the little people.. The small things that slowly make the world turn the way... it does. Hence the term moves the economy.
The Big Rich man is in fact very much reliant on the little person on the street this way... All in the big inter-connected Circle of Life. keep the money circulating back down.. U just do your parts in eating your Maggi Mee goreng... and the Vicious cycle will revert itself to become a Holy Giving circle back the other way around.

Happy New Year & a Happy Prosperous Dragon New Year ahead.

Harry Teh

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