Saving money is a wonderful thing. It gives banks money to invest, it gives the average person money to invest, money is thrown into markets that would not have otherwise seen those dollars, and the list goes on. Unfortunately, the economy we live in is driven by consumer spending.
Money circulates even further, creating jobs and supporting industry, if spending rises or stays static.
The savings speed, which used to be reflected by unenthusiastic numbers, has risen all the way to 5.7% in April. (Here's a suggestion: If savings rates were once in negative levels, we were spending more than the money we earned.) In a time when what we really need is expenditures, that is when Americans have made the decision that we are going to save. That is so astoundingly backward. Let's spend when we actually need to save and let's save when we certainly need to spend.
The economic challenges we are currently facing were somewhat produced by the large amount of individual and government expenditures, financial irresponsibility, and elevated debt. Sadly, personal expenditures, not government expenditures, mind you, on a small scale from a enormous array of consumers, is really one of the best repairs for the economic challenges we are in right now. The humorous thing is that most Americans had the idea they were previously saving. They thought a lot of what they were spending was considered saving: home improvements to raise home value, real estate purchases, and much more, expecting these were all investments, with the hope of a positive return. This was further fueled by even higher home values and a corresponding "wealth effect". Investors felt the same way about the stock market. Investments in the bank were low, creating falling CD and saving account interest rates. It was rational, however, due to a much less return from banks than other investments. "What drove the savings rate down was stock cost appreciation and housing appreciation. People spent on those because they thought it was like saving," claimed J.P. Morgan Chase economist Bruce Kasman.
The belief that investing is saving was obviously wrong, because it helped lead to the downgrading of banks, helping to cause this calamity. The proper saving is always good for a booming economy. However, right now, no saving is beneficial for the economy. No one had been saving before, so saving now is the right mode of revival. Spending, which is growing, will actually be one of the most helpful economic revival actions the downturn has seen. When the economy has recovered, all the indexes are solid, and joblessness is not so pitiful, feel free to save again the right way. - 23309
Money circulates even further, creating jobs and supporting industry, if spending rises or stays static.
The savings speed, which used to be reflected by unenthusiastic numbers, has risen all the way to 5.7% in April. (Here's a suggestion: If savings rates were once in negative levels, we were spending more than the money we earned.) In a time when what we really need is expenditures, that is when Americans have made the decision that we are going to save. That is so astoundingly backward. Let's spend when we actually need to save and let's save when we certainly need to spend.
The economic challenges we are currently facing were somewhat produced by the large amount of individual and government expenditures, financial irresponsibility, and elevated debt. Sadly, personal expenditures, not government expenditures, mind you, on a small scale from a enormous array of consumers, is really one of the best repairs for the economic challenges we are in right now. The humorous thing is that most Americans had the idea they were previously saving. They thought a lot of what they were spending was considered saving: home improvements to raise home value, real estate purchases, and much more, expecting these were all investments, with the hope of a positive return. This was further fueled by even higher home values and a corresponding "wealth effect". Investors felt the same way about the stock market. Investments in the bank were low, creating falling CD and saving account interest rates. It was rational, however, due to a much less return from banks than other investments. "What drove the savings rate down was stock cost appreciation and housing appreciation. People spent on those because they thought it was like saving," claimed J.P. Morgan Chase economist Bruce Kasman.
The belief that investing is saving was obviously wrong, because it helped lead to the downgrading of banks, helping to cause this calamity. The proper saving is always good for a booming economy. However, right now, no saving is beneficial for the economy. No one had been saving before, so saving now is the right mode of revival. Spending, which is growing, will actually be one of the most helpful economic revival actions the downturn has seen. When the economy has recovered, all the indexes are solid, and joblessness is not so pitiful, feel free to save again the right way. - 23309
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