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A savings rates (of a person's income) of 15% is higher than a savings rate of 5% is higher than a savings rate of 0%. Some of those savings goes to building an

A savings rates (of a person's income) of 15% is higher than a savings rate of 5% is higher than a savings rate of 0%. Some of those savings goes to building an emergency fund (which eventually tops out), while other savings goes into a retirement account to generate for future income; some may go into a child's education fund. Eventually most people will retire and draw down their savings. Eventually one's child will grow old and go to some kind of post-secondary school and need money for tuition, books, etc.

gruez 5y ago
That doesn't really answer OP's question, which is how everyone would turn those savings into goods/services. At the end of the day, the production capacity of the economy is fixed, and if there's more dollars chasing the same amount of goods, the value of goods will go up and the value of dollars will go down.
- nightski 5y ago
  I'm not sure I agree that the production capacity of the economy is fixed. It's heavily dependent on the value of that production.
  - gruez 5y ago
    Just because something is high value and resources from lower valued production can be diverted into them, doesn't mean that the production capacity of the economy as a whole isn't fixed. At the end of the day there's still only so many people available to do stuff, and so many machines/raw materials available.
- throw0101a 5y ago
  > That doesn't really answer OP's question, which is how everyone would turn those savings into goods/services. You don't. Saving = not-spending = not getting goods and services. At least not at the present moment. You save now to protect against future income risk (e.g., emergency fund) and future income needs (e.g., retirement). You convert savings to cash flow when non-savings (e.g., employment income) dries up.
  - gruez 5y ago
    >You save now to protect against future income risk (e.g., emergency fund) and future income needs (e.g., retirement). You convert savings to cash flow when non-savings (e.g., employment income) dries up. Everything you described works at an individual level, but fails at a societal level, which is what the GP was talking about. If society as a whole saved a bunch of money, and a few years later there were some sort of society-wide income risk (eg. war), those dollars won't do you much good.

gruez 5y ago

That doesn't really answer OP's question, which is how everyone would turn those savings into goods/services. At the end of the day, the production capacity of the economy is fixed, and if there's more dollars chasing the same amount of goods, the value of goods will go up and the value of dollars will go down.

nightski 5y ago
I'm not sure I agree that the production capacity of the economy is fixed. It's heavily dependent on the value of that production.
- gruez 5y ago
  Just because something is high value and resources from lower valued production can be diverted into them, doesn't mean that the production capacity of the economy as a whole isn't fixed. At the end of the day there's still only so many people available to do stuff, and so many machines/raw materials available.
throw0101a 5y ago
> That doesn't really answer OP's question, which is how everyone would turn those savings into goods/services. You don't. Saving = not-spending = not getting goods and services. At least not at the present moment. You save now to protect against future income risk (e.g., emergency fund) and future income needs (e.g., retirement). You convert savings to cash flow when non-savings (e.g., employment income) dries up.
- gruez 5y ago
  >You save now to protect against future income risk (e.g., emergency fund) and future income needs (e.g., retirement). You convert savings to cash flow when non-savings (e.g., employment income) dries up. Everything you described works at an individual level, but fails at a societal level, which is what the GP was talking about. If society as a whole saved a bunch of money, and a few years later there were some sort of society-wide income risk (eg. war), those dollars won't do you much good.