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Thread: Good News: People are Saving 10% of their incomes again

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    Default Good News: People are Saving 10% of their incomes again

    12.3% to be exact

    I am dubbed a bit of a doomsayer around here, but when I see something positive, in my view, I will mention it. There has been a dramatic increase in household savings from 0% in 2007 to 12.3% in 2009. This is an interesting report released from the CSO today, as it gives an indepth breakdown of total production, GDP, consumption, expenditure etc of Government, Financial sector, Non Financial companies and households.

    http://www.cso.ie/releasespublicatio.../isanonfin.pdf

    Its unfortunate that people are getting nothing in interest for the discipline of saving and also that most of it is going to service debt. However from a behavioural context its encouraging that the discipline of saving has re-established even in the absence of financial incentives.

    10% of household income being saved is reasonably satisfactory as it should supply the funding for firms to invest with. This natural market for money supply is regulated by the rate of interest that the borrower and saver agrees upon in a macro environment. This is the cornerstone of a healthy economy with a savings induced growth. No bubbles, booms and busts.

    However thats the ideal world. In the here and now, savers need to be rewarded with a higher rate of interest and the monstrous debt monkey of up to €1 Trillion needs to somehow be addressed and dealt with.


    But as I say, nice to get some real good news in the midst of the gloom.
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Friedrich A. Hayek

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    I am sure FF are thinking of ways of getting their hands this money.

    I guess it won't be long before some far left campaigner claims this is proof of wealth hoarding or some other ridiculous idea.

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    Savings ratios were too low but are now too high !! We need consumer spending in order to drive economic growth. Consumers will continue to save until such time as they get some confidence back - hearing that taxes are going to increase and services will be cut doesn't engender much confidence.

    Ideally a savings rate of c6%/7% is where we need to get to.

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    Politics.ie Member Mister_Jinks's Avatar
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    Quote Originally Posted by Harmonica View Post
    I am sure FF are thinking of ways of getting their hands this money.

    I guess it won't be long before some far left campaigner claims this is proof of wealth hoarding or some other ridiculous idea.
    We all ready have DIRT (tax) on our savings. Although as interest rates on savings account are admittedly low it can't be a huge source of cash for the Revenue. It's not to be sneezed at either I'd say though.

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    Quote Originally Posted by adrem View Post
    Savings ratios were too low but are now too high !! We need consumer spending in order to drive economic growth. Consumers will continue to save until such time as they get some confidence back - hearing that taxes are going to increase and services will be cut doesn't engender much confidence.

    Ideally a savings rate of c6%/7% is where we need to get to.
    Absolutely agree. People are saving out of fear. They're not saving for a new car or house or holiday. They're simply hiding away their money for the 'rainy day'. If people save all their disposable income what will drive an economic recovery?

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    Quote Originally Posted by Rochey View Post
    Absolutely agree. People are saving out of fear. They're not saving for a new car or house or holiday. They're simply hiding away their money for the 'rainy day'. If people save all their disposable income what will drive an economic recovery?
    How awful, saving for a rainy day They should be out there buying overpriced crap to keep up with the Jones' and "drive an economic recovery" rather than being responsible adults.

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    Quote Originally Posted by Electric Sheep View Post
    How awful, saving for a rainy day They should be out there buying overpriced crap to keep up with the Jones' and "drive an economic recovery" rather than being responsible adults.
    That's capitalism!!

  8. #8

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    Quote Originally Posted by adrem View Post
    Savings ratios were too low but are now too high !! We need consumer spending in order to drive economic growth. Consumers will continue to save until such time as they get some confidence back - hearing that taxes are going to increase and services will be cut doesn't engender much confidence.

    Ideally a savings rate of c6%/7% is where we need to get to.
    Bull. People were saving 10% of their income back in the 90s up until 1999.

    Where the 90s a nightmare like today? No, far from it. If people do not save where does the money come from for firms to borrow and invest with?
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Friedrich A. Hayek

  9. #9

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    Quote Originally Posted by Rochey View Post
    Absolutely agree. People are saving out of fear. They're not saving for a new car or house or holiday. They're simply hiding away their money for the 'rainy day'. If people save all their disposable income what will drive an economic recovery?
    How is 10% saving all their disposible income? 90% goes on consumption. Recoveries comes from fixed capital formation, ie firms investing in capital goods.
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Friedrich A. Hayek

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    Moderator Cato's Avatar
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    Quote Originally Posted by Cassandra Syndrome

    Bull. People were saving 10% of their income back in the 90s up until 1999.

    Where the 90s a nightmare like today? No, far from it. If people do not save where does the money come from for firms to borrow and invest with?
    The Germans?
    “I would rather be exposed to the inconveniences attending too much liberty, than those attending too small a degree of it." - Thomas Jefferson (yeah, I'm aware of the irony)

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