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Household savings would be lower if governments take on more debt, but they insist on running surpluses. Germany in particular has kept wages for workers depres
by Despegar 7y ago
Household savings would be lower if governments take on more debt, but they insist on running surpluses. Germany in particular has kept wages for workers depressed as part of their "economic model". Germany should be cutting taxes for workers significantly and investing in infrastructure, defense, and social programs.
In fact a lot of the rich EU members should be doing that, but they all have a misguided notion of "fiscal prudence". As if the government's budget is the same as a household's budget.
- candiodari 7y agoIsn't it the opposite? Money goes from government into the economy through spending, and thus through debt. More debt results in more household savings, not less.
- Despegar 7y agoHouseholds wouldn't feel like they have to save so much if they felt their economic situation wasn't so precarious. If their incomes were growing faster and they had more safety nets they'd be consuming more.