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Articles People are saving less and less. Credit card use is at an all-time high and short term bridging devices such as payday loans are becoming more and more prevalent. Spending is good for the economy. The multiplier effect means that a person who spends $100 is going to be injecting far more into the economy. But saving doesn't have to mean that money exits the cycle and the economy contracts.Saving can be done in the form of investing and this will see the money still there. For instance a person might build a house that they then rent out. They could buy shares in a company and the company will then have the benefit of those funds. They may buy government bonds and the government will in turn have the money at its disposal to do with it as it pleases. It is important that people have the means to support themselves. Individuals don't have the same devices that companies and governments have if they find themselves in financial trouble. A person has to spend within their means. While it can be difficult when things are so expensive, the most important thing is that a person does their best to balance their books. On a micro-level it can add up and the economy as a whole can suffer due to lack of saving. The generation of today could make things very difficult for those of tomorrow. |
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Fiscal Study | Global Economy and International Politics : 2007 - 2010 | |