Comments on: Is Saving Bad? The Paradox of Thrift Says Yes http://www.thewriterscoin.com/2009/01/30/is-saving-bad-the-paradox-of-thrift-says-yes/ Making Personal Finance and Money Interesting Wed, 28 Jul 2010 11:24:01 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Hyperion http://www.thewriterscoin.com/2009/01/30/is-saving-bad-the-paradox-of-thrift-says-yes/#comment-6280 Hyperion Wed, 04 Mar 2009 16:04:04 +0000 http://www.thewriterscoin.com/?p=1222#comment-6280 Checkout the Mises institute at www.mises.org The Austrian school of economics maintains that this view is completely off base. Savings is really just future consumption that is put on hold to finance increases in productive capacity. If you have no savings, GDP cannot grow. What the Keynesian model neglects to address is the fact that savings is the source of capital for investment. This whole economic mess is due to a lack of savings in the first place. This recession will last until our savings level comes back up to acceptable levels. Checkout the Mises institute at http://www.mises.org

The Austrian school of economics maintains that this view is completely off base. Savings is really just future consumption that is put on hold to finance increases in productive capacity. If you have no savings, GDP cannot grow. What the Keynesian model neglects to address is the fact that savings is the source of capital for investment. This whole economic mess is due to a lack of savings in the first place. This recession will last until our savings level comes back up to acceptable levels.

]]> By: Festival of Frugality: Singles Awareness Edition — Broke Grad Student http://www.thewriterscoin.com/2009/01/30/is-saving-bad-the-paradox-of-thrift-says-yes/#comment-5313 Festival of Frugality: Singles Awareness Edition — Broke Grad Student Tue, 10 Feb 2009 12:03:36 +0000 http://www.thewriterscoin.com/?p=1222#comment-5313 [...] Writer asks Is Saving Bad? The Paradox of Thrift Says Yes at The Writer’s Coin. In these tough financial times, people are saving more money instead of [...] [...] Writer asks Is Saving Bad? The Paradox of Thrift Says Yes at The Writer’s Coin. In these tough financial times, people are saving more money instead of [...]

]]> By: Weekend Roundup: Cabin Fever Edition - Wealth Is Boring http://www.thewriterscoin.com/2009/01/30/is-saving-bad-the-paradox-of-thrift-says-yes/#comment-5210 Weekend Roundup: Cabin Fever Edition - Wealth Is Boring Sat, 07 Feb 2009 11:51:53 +0000 http://www.thewriterscoin.com/?p=1222#comment-5210 [...] Is Saving Bad? The Paradox of Thrift Says Yes An extremely interesting post at The Writer’s Coin discusses why it may be in your best interest to spend, rather than save. Like he said, a good argument is presented on both sides, but I’m a saver by nature and that’s a character trait that won’t be changing anytime soon, struggling economy or not! [...] [...] Is Saving Bad? The Paradox of Thrift Says Yes An extremely interesting post at The Writer’s Coin discusses why it may be in your best interest to spend, rather than save. Like he said, a good argument is presented on both sides, but I’m a saver by nature and that’s a character trait that won’t be changing anytime soon, struggling economy or not! [...]

]]> By: scared Indio http://www.thewriterscoin.com/2009/01/30/is-saving-bad-the-paradox-of-thrift-says-yes/#comment-5049 scared Indio Mon, 02 Feb 2009 15:47:03 +0000 http://www.thewriterscoin.com/?p=1222#comment-5049 The biggest reason for the increase in savings is that people have stopped paying on their upside-down mortgages. i.e. All things being equal, I still have a job, no major expenses, I just decide not to continue paying on the upside down loan... SO If I stop paying my 3500 dollar mortgage until they kick me out (1-2 years) Am I really saving? These trends have been with us for over 30 years, no way we change direction on a whim. The rest of the world lives by the following statement: "You are worth what you own" In the USA though, "You are worth what you owe". Not good. Best, The biggest reason for the increase in savings is that people have stopped paying on their upside-down mortgages. i.e. All things being equal, I still have a job, no major expenses, I just decide not to continue paying on the upside down loan… SO
If I stop paying my 3500 dollar mortgage until they kick me out (1-2 years)

Am I really saving?

These trends have been with us for over 30 years, no way we change direction on a whim.

The rest of the world lives by the following statement: “You are worth what you own” In the USA though, “You are worth what you owe”. Not good.

Best,

]]> By: the weakonomist http://www.thewriterscoin.com/2009/01/30/is-saving-bad-the-paradox-of-thrift-says-yes/#comment-5047 the weakonomist Mon, 02 Feb 2009 14:50:34 +0000 http://www.thewriterscoin.com/?p=1222#comment-5047 I'm not a fan of this paradox. It only supports the keynesian economic view that consumption should be the backbone of the economy. Look at it from a different perspective. If you save more then you keep more deposits with the bank. Deposits at the bank are used for lending. More lending creates more jobs, more jobs create more consumers. I think there is a sweet spot between consumption and saving that we must find to have a stable economy. The keynesians will argue this isn't true, but that argument is simply based on the fact we've never tried it before. I’m not a fan of this paradox. It only supports the keynesian economic view that consumption should be the backbone of the economy.
Look at it from a different perspective. If you save more then you keep more deposits with the bank. Deposits at the bank are used for lending. More lending creates more jobs, more jobs create more consumers.
I think there is a sweet spot between consumption and saving that we must find to have a stable economy. The keynesians will argue this isn’t true, but that argument is simply based on the fact we’ve never tried it before.

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