Theres a piece in todays times that says we should be encouraged to spend our savings to help the UK out of its recession. What kind of baloniy is this?

So went Ive spent my safety-net/savings on 20 50″ plasma tv’s and new cars etc will the government then reward me by giving me my hardearned savings back afterwards?!!!!

Idiots are everywhere.

It’s the Times. What do you expect?

Go away and read about the paradox of thrift. You may call John Maynard Keynes an idiot on mature consideration if you wish, but to do so based on your own flimsy relationship with reality and scholarship is rather rude.

🙂

Well I am sp*nking £30k on an extension this year so maybe I will get a KNighthood or something?

Hell, let’s just print some more money, it’s working well for Mugabe…

hora it sounds as though you don’t have a clue what your on about. Since you’re clearly all clued up on economics explain how you, if you were a government advisor, would get the UK out of a recession.

The simple idea is that if consumers spend rather than save this will help the economy grow, if we’re buying products and services then we help businesses keep people in employment, because they have cash flow they donít have to borrow so you donít need so much in the banking system. Itís not a ëquick fixí but it will work. I think people need to look at the long term here.

It sounds as if you think this is still al about a ‘banking crisis’.

so the answer is more debt? that’s what’s sustained the economy for the last 10 years.

Gary_M – Member
The simple idea is that if consumers spend rather than save this will help the economy grow, if we’re buying products and services then we help businesses keep people in employment, because they have cash flow they donít have to borrow so you donít need so much in the banking system. Itís not a ëquick fixí but it will work. I think people need to look at the long term here.

So – if I spend all my savings, and therefore have no income from investments, who’s supporting me? How does that help the economy?

Bigdummy has already said it.

If you rely on investments for income then thats different the idea is to spend as normal not necessarily change patterns due to a percieved downturn in the economy. For many thats what it is, perceived, given increased levels of information from the media.

So – if I spend all my savings, and therefore have no income from investments, who’s supporting me? How does that help the economy?

It helps Labour.

Sorry. We need tough love. Labour keep thinking they have to be seen to be doing something, anything. That is the paradox (if thats what you brainy bigdummies call it).

Soon, we will see increases on taxes on savings accounts.. The government will ‘pressure’ (do they need to?) to impliment a interest-holiday where no interest is paid for a period of 6months on all savings…

Lets bookmark the above thought and comeback to that in a month or two..

Anyone would have thought that the Weimar republic and Robert Mugabe were the only people in the history of finance who had ever printed money. Which is in any event a different issue to encouraging consumer spending out of savings rather than debt by way of economic stimulus.

Hora – you did vote for McCain/ Palin didn’t you?

No, we will not see a rise in tax on savings, it will not be needed. Rather, the reduction of the BoE rate reduces the rates paid on short term deposits by retail banks, which increases the opportunity cost of holding cash.

We print money all the time to enable economic expansion.

aP – Member

Hora – you did vote for McCain/ Palin didn’t you?

No but if you spend your savings with me, I will be your comfort-whore. Think of it this way, for years you will remember the memory of what your money paid for.

£30k on an extension? No if you want a knighthood you gotta loan that to the Labour party 🙄

druidh no one is suggesting spending all of your savings which generates an income from you. Its about the general publics margin propensity to save/consume based on interest rates.

Anyone would have thought that the Weimar republic and Robert Mugabe were the only people in the history of finance who had ever printed money.

Didn’t the Japanese successfully get their economy out of a slump in the 90s by printing more cash?

(Mike sounds informed when actually he just listened to 10 minutes of Radio 4 while washing up this morning.)

Hora the Labour party are following Labour party principles in terms of of a recession – they’re not just doing ‘something, anything’. Perhaps you would prefer a more ‘Laissez Affair’ attitude to the economy.

I’ll ask again Hora in the hope of getting an answer – ‘What economic principles would you apply when the UK is in the midst of a recession?’