Formerly About Advanced Micro Devices Message Board

To: steve harris who wrote (370525)	2/10/2008 11:59:06 PM
From: neolib	Read Replies (2) of 716362

I'm curious whether there is even remote consensus among economists these days on the subject. You would certainly think from Congress & the Pres running to prime the pump that Keynsian thinking dominates, and that the mantra is consume at all costs. IIRC, Keynes called it the Savings Paradox: how increased savings can lead to lower demand and lower investment which causes the economy to contract. I have never found a good analysis of the benefits of accumulated savings in terms of risk reduction. Accumulated savings (is that redundant?) should make the economy more stable I would think. Anyway, it seems like a very basic economic metric would be the net accumulated savings that an economy should have. If banks have reserve requirements, why not the general economy as well? Is there any theoretical basis for determining even crude optimality for such?