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Politics : Politics for Pros- moderated
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To: mistermj who wrote (149542)12/4/2005 10:25:42 AM
From: Bridge Player   of 793914
 
Urging individuals to save more is counterproductive. Individual saving does not mean that funds are created out of thin air to put into savings accounts or the capital market; for most individuals savings is non-spending which becomes the non-income and reduced savings of the vendor. Funds are transferred from the bank account of the vendor to the account of the saver, there is no increase in total money in the bank, and no facilitation of investment, while reduced market demand will actually discourage investment. Savings are neither a prerequisite nor an inducement for investment. Rather, non-spending by reducing market demand lowers incentives to invest.

For significant evidence supporting this thesis one need only look at Japan, with decade-plus long high savings rates and slow economic growth.
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