Why can't they get savings because the Govt lowers interest rates to 0%? Buy a T-Bill and get 0% or put it with a bank and get more.
How many more people would be willing to save if interest rates were at their normal, market levels? The fact that you don't get anything for saving is a huge discouragement to for people to save their capital.
Well I don't know. I don't many more really. Because I don't think many are really not saving at the moment, and in fact are saving more -- too much because they aren't spending.
Is savings really a problem with the banks? I don't think so. I think the problem is the asset side of their balance sheet is full of crap and that is what is driving down their equity, not a flight of savers.
Yes it is. It's absolutely why our economy is hinged on allowing banks to conjure money up out of nowhere. That's why inflation gets so high during booms and deflation gets so severe during recessions (i.e. now). Because banks conjure up so much money to feed into the misallocation and lose so much money when those misallocations are rectified.
Imagine if this fraud was eliminated, and banks could loan only what it had? Think of how severe the recession to rebalance our economy would be. That's how out of whack our economy is... when we're forced to live on artificial creation of money.