Ok who\'s retarded, Me or Newsweek (Economics)
 

So im flipping through newsweek and I come across an article saying that increased personal savings is currently the biggest threat to the US economy.

I was under the impression that increased personal savings is one of the best things posible for growing an economy because it creates so much capital that banks can loan out or gives capital directly to companies if people are investing.

What gives.

Re: Ok who\'s retarded, Me or Newsweek (Economics)
 

[ QUOTE ]
[..] increased personal savings is currently the biggest threat to the US economy.

[/ QUOTE ]


Consumers get the blaim, instead of govt spending, lending and money printing.



Standard news & media behaviour.

Re: Ok who\'s retarded, Me or Newsweek (Economics)
 

Considering US households have been saving at a level so low that it is considered unstable and unhealthy, an increase in savings is not a disaster for the economy. It will mean slower short-term growth, however.

Re: Ok who\'s retarded, Me or Newsweek (Economics)
 

Increased savings indicates that consumers are using more discretion in which products they decide to buy. They prefer holding onto their money, rather than presently trading it for goods and services they do not value as highly.

This will increase competition between companies -- perhaps some that aren't keeping up with the change in consumer demands will fold. All this means is that the producers who are able to adapt and provide a better and wider range of products will be the ones to survive. Then, the capital will once again start to flow, this time in their direction, since they will be the best at providing for their customers.

Re: Ok who\'s retarded, Me or Newsweek (Economics)
 

what's the current rate at? Is it up to 0% yet?

Re: Ok who\'s retarded, Me or Newsweek (Economics)
 

The media's idea of a good economy is one where "consumers" spend all their money buying complete crap and making "entrepreneurs" rich. In truth, if your goal is to maximize productivity, they're right, as a person who saves more retires and ends up doing less work in their lifetime. OTOH, if your goal is to maximize happiness, they're completely ridiculous. Corporations and government (Reps and Dems alike), the two groups for whom pro-bias in the media is the greatest, both make a lot more money/power/whatever from our productivity than our happiness, so it's only natural for a magazine like Newsweek to say something like this in an attempt to convince people to sacrifice their happiness for the "good of the country." (AKA corporations and government)

Re: Ok who\'s retarded, Me or Newsweek (Economics)
 

[ QUOTE ]
So im flipping through newsweek and I come across an article saying that increased personal savings is currently the biggest threat to the US economy.

I was under the impression that increased personal savings is one of the best things posible for growing an economy because it creates so much capital that banks can loan out or gives capital directly to companies if people are investing.

What gives.

[/ QUOTE ]

increased personal savings can be a problem because US inflation is currently larger than priced in and has unsustainable future fiscal obligations. US citizens face the risk of being the last holders of US dollars should China decide to pull the trigger (if they come to value oil more than US consumerism, for example), among many other potential triggers , coupled with a general USD downtrend for a variety of factors.

Those who spend now or increase savings abroad (where interest rates are currently rising fyi) will benefit while the purchasing power of the later converters erodes.