Note To Economists: Saving Doesn’t Create Savings

[Kosh]

So that is a no, you can not provide any examples..

Just far left religious dogma!

Corporate bonds, mortgages, bank loans..

And you just proven my point..

Nothing but far left religious dogma..

You just proven you are here to push the far left religious agenda!

YEP. HURRRR.

Come back when you have actual proof of your beliefs..

 

[davecmarino]

The concept that you are trying to convey is the use of leveraging in financing investment. While this pays off for some it also does other investments in. Most people cannot leverage without collateral which means that you at least had to save something and build collateral before you could risk it in an investment that will provide a greater rate of return than the borrowing rate.

Most operations cannot utilize debt finance prior to showing they are a viable operation with no going concern issues.

Savings comes before debt finance. But it is more appropriately a function of a positive cash flow, experience, and a business plan that seems to provide a future return on investment.

The savers provide the capital that will be combined with the risk-takers collateral into a new investment.


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[sonic]

Why is this article even in dispute? It basic economics. Cash flow is the life blood of business and the economy and if everyone starts hoarding money, then businesses struggle, people are laid off and savings rates drop. The adage "use other peoples money" is heavily used by the most successful people in the world. Hell, even that asshole Donald Trump calls himself the "King Of Debt".

 

[chikenwing]

OMG we need to liquidate all IRA's and 401's to be really rich

Spending causes savings. Your post is silly.

That sounds like far left religious talk..

Please show all the people that spent their way to prosperity while running up trillions in debt?

You have to understand the economy as a whole.
The majority of people who are now successful went into debt to get to that point. Have you heard of the paradox of thrift?
If we all decide to save more, aggregate demand drops, sales go down, and less income.

If people hord,and yes many have debt,but putting money away isn't bad