Does saving money hurt the economy?

Answer 1

the answers here are all pretty accurate, but I just had one thing to add. Savings will not increase growth, but it can actually increase the level of consumption in the economy. This is called the Golden rule of capital accumulation, and it was developed by the nobel prize winner in 2006 of economics. The United States is almost always below this golden rule point, and therefore saving will usually be a good thing. However it is possible to save too much and move beyond this point, therefore hurting the level of consumption.

So the take-home message is this: there is such a thing as saving too much, but in general, and especially in the U.S., saving is a good thing and will actually increase our consumption.

The idea that saving more will increase our consumption seems entirely paradoxical, but it's based on the idea that saving more will increase our incomes, which will therefore also increase our consumption moreso than the decline in consumption due to our increased savings. Read up on the Solow Growth Model and the Golden Rule of Capital Accumulation if you're interested in more info.

Answer 2

Like many stuff, some saving is critical and solid, yet too a lot saving is undesirable because it stifles intake and economic advance. mark downs is channeled into employer funding, which makes the business device more desirable powerful (ie, new factories, more desirable kit). that's solid. yet when human beings bypass overboard and do not spend adequate, then those new factories under no circumstances get equipped because there's no choose for them. Your instinct about funds advance is faulty. You view it as a nil-sum sport (ie if someone positive factors $one hundred, some different person ought to lose $one hundred). In economics, paying for and promoting companions both win, wealth grows, and the provision of money grows. the provision of neither funds nor wealth is fastened ... they could and do improve. Wealth grows because the point of economic production will advance, and when you consider that the full cost of resources will advance. Valuation is (regardless of each and every thing) fullyyt a human opinion. Society's collective opinion about the cost of issues can advance, and that is a real advance in wealth. If that's basically too precis for you, then recognize that the actual furnish of money grows also, because funds is created at the same time as banks loan funds. a superb economic device with a healthful quantity of credit (lending) reviews an advance interior the money furnish to bypass alongside with the upward push in economic pastime year after year.

Answer 3

If you are American, no. In all, Americans now owe more money than savings. This cannot go on forever, and savings certainly helps the economy in the long run.

Answer 4

In general, savings leads to investment which leads to further growth. However, the cautionary tail of Japan is worth studying if you are interested in this subject. Essentially, savings rates were so high that savings were provided to poor investments. Money was lent to high risk ventures at minimal interest rates, thus posing a 'risk hazard'. The result was a great economic collapse whose aftermath lingers together.

Answer 5

No, though anything in excess can cause problems. Both saving AND spending are good. Spending boosts current GDP growth, which is good. Saving increases the supply of capital available for businesses to use to invest, which should increase productivity over time, which is good.

TOO MUCH saving in place of spending could cause a recession and deflation -- its hard to imagine Americans ever being guilty of that, but the Japanese have probably been guilty of that in recent years.

Answer 6

No. Your money, when it is saved in the bank, is lent to someone else to be spent elsewhere.
Saving money can actually help the economy.

Answer 7

saving and investing are the best things for an economy!

Answer 8

No - long run growth, in fact, is determined by savings and technological progress.

Instead of consumping today; you get consumption + interest tomorrow.

If you have an understanding of intermediate micro; a good book is "Foundations of INternational Macroeconomics", by Obsfeldt

Answer 9

it hurts humanity. balanced flavours of investment, saving and charity helps the community