Given the current economic situation, how on earth can spending money make sense?

Question by Rick: Given the current economic situation, how on earth can spending money make sense?
I have a dollar, you need help, but you need 5 dollars, so I give you my dollar plus what? Money pulled from my backside?

Don’t say bonds either, because the bonds are sold after the fact.

I don’t have a masters in economics but how does this make any sense?

Best answer:

Answer by meg
Picture a 3 person economy with a farmer, someone who raises horses and a blacksmith that makes horse shoes and farm implements. The blacksmith uses horses to bring fire wood to his forge and the farmer needs them for plowing , If any one of them reduces spending the others will sell less and so will also reduces spending and the economy will slow and all three will be worse off.

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