And the government isn't cutting spending because government spending is the whole point of the exercise. Consumers have stopped spending (consumer spending is 70% of the economy/GDP), business have stopped investing because nobody is spending, people are being laid off because everything is slow. Those laid off people cease spending too, which creates more layoffs/falls in spending, which can lead to a vicious deflaionary spiral. like what happened in 1929. That's why the government is increasing spending! If they don't, the whole thing can easily tip into depression because [i]nobody else is spending.[i] The government is currently the lender of last resort and now has also to be the spender of last resort.