The RBA is worried we are saving too much!!!

The only reason I still get The Oz is because it has two sudokus and as I was turning to these tonight, what should be on the front page of the business section but this: Are we saving too much? Weak spending a risk to our economy. Now just because the world is coming to an end tomorrow is no reason not to comment on such idiocy. These Keynesians are as bad as Democrats, probably because each is the same as the other. But really, what can you do with such stuff?

The weak state of household consumption is a key risk to economic growth with little evidence that people are cutting their savings to raise spending levels, as the Reserve Bank expects. . . .

The Reserve Bank’s essential thesis about the economy is that consumers will support growth during the current period of weak household incomes by running down their savings to support spending. Eventually, this will lift demand to a point where non-mining businesses will start to invest.

You know, this is so ignorant that it quite takes the breath away. Do they really believe such things? Does anyone? Have they not been paying attention for the past eight years? I will just say it again, not that anyone understands it, but no economy grows from the demand side. All momentum comes from value adding production. To depend on retail sales and consumer demand to provide an economy with its drive is to depend on what has never ever happened in history to happen for the first time. It really is amazing to me to find that I remain the only one in step. Say’s Law is the single most important principle in the whole of economics, precisely because it is the one principle that is not intuitively obvious. If they really think our economies are suffering low growth because we are saving too much they will never ever understand a single thing of consequence about how an economy works.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s