One the one hand, I want to believe that increased frugality would cause a shift in the world economy back to they way the economy worked in earlier eras.

On the other hand, there are already more workers than the economy could support if everyone became frugal and spent less. And, for the foreseeable future, the population is only going to increase, which means the economy also has to increase to absorb all of the additional workers.
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Say we’re frugal, and we invest in the S&P 500. Are we not spending our money on the 500 biggest companies in the U.S. and hoping they do well? Or is that not truly consumer spending?
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When we need a pair of pants we don’t get in the car and drive to the corner store to get a pair of pants. No, we have 100 choices to make as to which store we will buy those pair of pants. We simply have too many choices.

But people say if we don’t support these businesses then they fail and others are out of a job. Yes, that’s true, but if we are spending our dollars elsewhere (such as staying home and planting gardens) now we are needing to buy seeds, and hoes, and water hoses…all these things that still need to be MADE. So the jobs will return not as coffee servers at Starbucks but in the factories producing garden tools, in the garden centers selling seeds and so on and so on…

Being frugal will not destroy the economy, it will cause it to shift to a better place, and I think we need that right now.

My husband and I spend money, but we are very choosy about what we buy and we use cash. We might not be blowing large sums of credit on big screen tvs, furniture and spectacular vacations, but we might some day have those things when we have the cash to pay for them.
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So maybe instead of buying more stuff to stimulate the economy, maybe the frugality mentality can help mold a different definition of success, that could in turn help the economy?
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i have a funny personal joke going on with myself after a long weekend and i see how much money i have spend, i tell myself, well at least i did my part to stimulate the economy….

@ Rany Day Saver, I think the problem with the depression of the 30′s was that the economy got into a downward spiral. Economy bad so people spend less. Econcomy gets worse so people spend even less etc. etc. This is part of the reason that governments have stepped in with stimulus packages, they are trying to stop that happening (not sure whether it was the right thing to do/whether it’s working). Unfortunately with the world economy you can’t do proper testing to see which idea would have worked better!

I think that frugal people will always be outnumbered by the big spenders, so be frugal and proud!

@Ryan, I sent you a draft guest post a while ago. Has it got trapped in your spam filter again or are you wondering how to tell me that it’s rubbish
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That being said, I think maybe a little government spending towards infrastructure (FDR style) could go a long way towards rejuvenating the economy. Nationwide high-speed rail line anybody?
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Ryan, with all due respect, I will disagree with the notion that spending is a good thing, at best its a band aid solution.

We are in this mess because we out spent and end up with the credit crisis that still haunts us to this day. At what point is spending not the patriotic thing to do?

My post: Save, it’s the most patriotic act. http://www.samerforzley.com/2010/07/05/save-it-the-most-patriotic-act/

Respectfully, @sforzley.