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1. So a part of the idea of near-zero interest rates in the US is to discourage saving and to encourage borrowing. 2. It seems hard these days to find anyone who has a good word for savings, or savers. 3. There has been talk of a global "savings glut" for a decade now, and Ben Bernanke the former chief of the US Federal Reserve, one of the original proponents,still sees the concept as a "useful perspective" for understanding current economic conditions. 4. The perceived problem is that money saved is not money spent and thus the effect of saving is to reduce aggregate demand; by keeping a dollar in your pocket, you deprive a neighbor of employment. 5. This is the "paradox of thrift"; if everyone tries to save too much, the economy will contract and the average person will be poorer, not richer. ___ |
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Answer» 1. So a part of the idea of near-zero interest rates in the US is to discourage saving and to encourage borrowing. 2. It seems hard these days to find anyone who has a good word for savings, or savers. 3. There has been talk of a global "savings glut" for a decade now, and Ben Bernanke the former chief of the US Federal Reserve, one of the original proponents,still sees the concept as a "useful perspective" for understanding current economic conditions. 4. The perceived problem is that money saved is not money spent and thus the effect of saving is to reduce aggregate demand; by keeping a dollar in your pocket, you deprive a neighbor of employment. 5. This is the "paradox of thrift"; if everyone tries to save too much, the economy will contract and the average person will be poorer, not richer. |
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