Economic times have you saving money? Thanks for making things worse! [View All]

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http://online.wsj.com/article/SB123120525879656021.html">Hard-Hit Families Finally Start Saving, Aggravating Nation's Economic Woes

BOISE, Idaho -- Rick and Noreen Capp recently reduced their credit-card debt, opened a savings account and stopped taking their two children to restaurants. Jessica and Alan Muir have started buying children's clothes at steep markdowns, splitting bulk-food purchases with other families and gathering their firewood instead of buying it for $200 a cord.

As layoffs and store closures grip Boise, these two local families hope their newfound frugality will see them through the economic downturn. But this same thriftiness, embraced by families across the U.S., is also a major reason the downturn may not soon end. Americans, fresh off a decadeslong buying spree, are finally saving more and spending less -- just as the economy needs their dollars the most.

Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation's standard of living. But in a recession, increased saving -- or its flip side, decreased spending -- can exacerbate the economy's woes. It's what economists call the "paradox of thrift."

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In Boise, families like the Capps and Muirs illustrate the paradox. This metropolitan area at the foot of the Rocky Mountains is home to a half-million people and is a base for electronics manufacturers such as computer-chip maker Micron Technology Inc. The area weathered downturns in the early 1990s and 2001, with unemployment rates remaining well below the national average. But now people here are socking away money they once would have spent, contributing in part to failing stores, shuttered restaurants and rising unemployment.

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So, for Pete's sake! Stop saving your money because you're making things worse!!!11!

Edited: Oh, and there's this too: http://www.latimes.com/business/la-fi-thrift2-2009jan02,0,2083247.story">New safety rules for children's clothes have stores in a fit - Thrift stores will no longer be allowed to sell children's clothes. Unless stores test each item for toxins, it all has to go to the landfill.