4 ms·
There's nothing strange about the headline, as an increase in savings relates to the spending multiplier, http://en.wikipedia.org/wiki/Spending_multiplier http
by mynameishere 18y ago
There's nothing strange about the headline, as an increase in savings relates to the spending multiplier,
http://en.wikipedia.org/wiki/Spending_multiplier http://en.wikipedia.org/wiki/Spending_multiplier
...the reason people like Krugman want the government to increase the deficit (the opposite of savings) is to plug the gap. Japan's extra-high savings rate is one reason why it's had 20 years of near-recession.
By saving money, people are (in an indirect way) buying government debt.
- mattmcknight 18y agoThe Japan problem was not the savings rate. The problem was the government propping up failing institutions for years, instead of just letting them go down. We need to start saving. Let the retail and services based economy decline. Let the creative and manufacturing based economy grow. Export. Krugman and company are going to kill the dollar.
- incomethax 18y agoEven in the face of a highly devalued dollar, the US is simply no longer equipped to shift to a manufacturing base. The cost structure for any manufacturing company that relies on labor is too high for any margin of competition due to current laws. If the dollar dies, especially if doing so removes its status as a reserve currency for much of the world's economies, the US economy/nation-state will be in for a long time of restructuring. The only part of the economy I see any potential real growth is the creative sector. That too is in some serious trouble with the number of science/engineering grads decreasing and the test scores for science and math being as dismal as they are for high schoolers. That's why I like gold ;-)