No the answer is that you need a healthy medium. Excessively high savings kills consumption spending and hinders growth. Excessively low savings (i.e. now) creates long-term problems like the baby boomer crisis, reliance on foreigners to pay for our bonds, etc..
I fear that you won't find any macroeconomist that would agree with that statement. Irrespective of the complexity of your model of the macroeconomy, the savings rate is the fundamental exogenous parameter that determines the capital stock.
Just funny that you brought up minoring in something 10+ (I am guessing at the time) years ago as a retort to show your understanding. I realize Major was being personal...but I still found it funny. Just ignore me.
Most here are asking the wrong questions and don't understand the economy- The American economy runs on debt. It is a bubble economy. The Fed loans money to Fed Banks who loan money to member banks who loan money to everyone else. The Fed also creates money supply by loaning money to the government. All this fun debt stuff is represented in the economy by computer entries and what most of us call Fed reserve notes (the fake cash you carry in your wallet) When interest rates are low consumer debt expands rapidly. This is a method bankers use to heat up consumer spending to raise standards of living temporarily- until the debt is due and exceeds the consumers ability to repay. But if we keep pumping debt into the economy someone can still paythe interest. A standard of living that is raised by debt is called a bubble. When the standard of living is raised by goods manufactured and sold for profit there is a cash surplus. This translates to savings, investment and expansion through asset value. No debt at all is needed in such cases. When personal savings are low and personal debt is high the logical effect is that there are many personal debt bubbles. People have assets that are not cash value, they are not liquid at all they are debt held assets. If everyone owned their home, owned their cars, and owned everthing that was an asset and were debt free then if the manufacturing of goods was not profitable for whatever reason and jobs tightened there would be the possibility of savings or assets to offset any hard times. When the economy is debt based to the extent it is now and was in the early 1920's then three things can trigger a sharp economic collapse- a debt crisis a cash crisis a manufacturing crisis We already have a manufacturing crisis since most manufacturing and durable goods are globaized. We already have a cash crisis because fewer people have accumulated their current standard of living without debt and the lack of personal savings strengthens that crisis. We do not have a debt crisis yet because China buys up our debt and still ties its trade to the $$$$ (that fake paper with green ink you carry around in your wallet) China cannot afford to casue a dollar crisis or debt crisis because right now they are cashing in so to speak on our cash by selling us everything they can produce at break neck speed. In other words they are becoming American dollar cash gluttons as we speak and as long as the dollar is alive they can spend like fiends now and develop everything they want in China including their bombs. So China is booming like there is no tomorrow. But if China makes a move toward oil or the Euro or they wise up to gold or anything else besides the dollar, they may want to dump our debt and let our sweet dollar take a slide. It would save their own economy in the long run, so one day I am sure they will do some sort of this scenario. At that time if there is not another player to come in and buy up Federal debt and sell us cheap goods- look out-- those of us who don't remember 1929 will get a crash course. So in summary China buys our debt which allows us to keep borrowing, and then turns around and sells us cheap Made In China goods (that we don't manufacter anymore) and we all look rich to the rest of the world- The American dream is alive and well at least by borrowing money from Super Rich Bankers who own the Federal Reserve System. I love America. Rich Bankers are not my friends.
And most people except for Tess realize how out of text and ridiculously stupid your signature is, and probably would rather you lose it. Yet you keep it like it was something that actually happened. Its NOT your place to dictate who and who doesnt do what. If Clutch wants people to donate bad enough, he can at the drop of a hat make it so. Until then, STFU about it already.
