From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Oct 11 2006 - 16:46:52 EDT
--- Jurriaan Bendien <adsl675281@TISCALI.NL> wrote: > Ajit Sinha wrote: > > But if savigs are invested, which is what classical > and neo-classical economics mostly believes, then it > sounds logical that a rise in savings would also > result in a rise in indebtedness. > > I don't see how that follows. The argument about the > "global savings glut" > (which some leftists criticize) is that world > savings exceed world > investment (with the important exception of the > USA). True, the fact that > savings can exceed investments by such a margin, is > already an anomaly for > the neoclassical theory. But it does not > automatically follow that a rise in > savings would lead to growing indebtedness, or > explain how specifically that > would happen. As I said, the observations can be > evaluated only by verifying > who owns the savings and the debts, and what form > they take. Additionally, > much depends on how we define "investment". > > It is obviously not true that the excess savings are > simply money stored in > an old sock. Liquid deposits too chase the highest > interest rates. __________________________ But if you go back to your statement which you have deleted and to which I had responded, you will find that you were puzzled by the phenomenon of rise of both savings and indebtedness at the same time. So I suggested that there does not seem to be anything puzzling here. As far as savings could be larger than investment is concerned, I think we know our 101 Keynsian macro--but this is only a disequilibrium situation in that case too. But again it appears that you contradict yourself in your last statement. Cheers, ajit sinha > > Jurriaan > __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com
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