When I suggested that savings are the basis for economic growth my teacher looked at me like I was crazy and said savings was a leakage. She said aggregate demand is a source of growth.
Why does Keynesian economic vilify savings so much? It’s not as though banks sit on your money idly, they lend it out to make money.
Keynes believes that total expenditures must equal total production, and that savings causes a gap between this process; thus causing falling prices and diminished profits. Keynes needs 0% interest rates and perpetual inflation in order to assure constant simultaneous consumption and investment, as he does not see the inherent trade-off between the two. Nor does he understand that production is a multi-stage process, that for every one firm/industry which produces the final output, there are many other industries/firms which produce the inputs necessary for that output. Keynesians simply don’t believe that the supply of potential investments are equal to the supply of savings (which is true, but that’s the problem).
Small correction, Keynes stated that the interest rate should/ would be slightly above 0%.
They didn’t even bother to inform us that what they were teaching was Keynesian economics because giving it a name would imply that there are other schools of economics. My Teacher taught us that part of this recession was caused by people finally listening to the old advice of saving what you earn. The housing market crashed because banks were greedy and convinced people to get loans 10 percent above what they needed. He briefly mentioned that part of the blame was because the government forced banks to loan to risky people.
My economics and history books both show the gold standard as being synonymous with the devil. I didn’t discover Austrian economics until a few months after the class ended so I wasnt able to offer a defense unfortunately.
thats your left-wing double think. Savers and hoarders are the worst things about an economy, at the same time capitalism is bad because of rampant consumerism (spending). it all boils down to class envy and hatred of wealth
Kaynes was a utopian who believe that society would not have to thing about the future, thus, he hated savings. See this The Persistence of Keynesian Macroeconomics