What Would Happen if We All Saved More Money?



I like to think that I am a fairly open minded sort of gal, so I found myself wondering, "What would happen if we all saved more money?" Maybe the experts  argument has some merit. In order to give their argument the serious consideration it deserves I asked myself a simple question:

"What would really happen to our national economy if we all saved more and spent less?"

Here are some of the answers I found:

Most experts tell me that it would have catastrophic effects and entire industries could be wiped out. Sounds scary doesn't it? Well before you start digging a survival shelter in your back yard let's look at this with a cool head.

The fact is the economists are right, it would have a devastating effect on our economy...at least for a while. But what if the economy we are trying to shore up is outdated and unsound. What if the very foundation of that economy - consumer spending - is unsafe, or too weak for the structure it supports?

If you have an old rickety building that is too big for it's foundation what do you do? You tear it down and build a new and workable building that is structurally sound. Ultimately, I believe that is what would happen to our economy.

Without a doubt the economists are right...entire industries would be wiped out. But exactly what industries are we talking about? Who are these companies that would cease to exist if the entire country was focused on saving?

Here are a few that immediately come to mind:

Pay day lenders - if everyone started to build their savings, instead of spending everything they make, they would quickly have an emergency fund. They would then have no need for quick and easy pay day loans. All of those storefronts would disappear from every street corner they occupy now. They would no longer outnumber the combined total of all Mcdonald's and Burger King franchises combined (as they do today). And Mr. and Mrs. Average Joe wouldn't have to pay over 400% interest on a payday loan anymore.

Credit card lenders - this industry too would be hard hit. Since consumers would have money in savings they would actually be able to pay off their debts and would be able to buy the things they want with cash. This may be hard to imagine but it was the way our economy operated up until the 1970's when credit cards started to proliferate.

In fact, any industry that lends money at high interest rates would probably cease to exist because consumers would have sufficient reserve capital. Those usurious loans wouldn't be needed. Just imagine how destructive that would be to our economy, not to mention our security and welfare.

Just think about it, if American's actually started to save more, they would eventually have substantial reserves and might even start looking for ways to invest. What would all the foreign investors that we so heavily rely on now to fuel our economy do?

I don't know about you, but I have a hard time seeing the problem here. The idea of affluent Americans (created by sustained saving) investing in America sounds like a good thing to me. If investment capital was locally available, it would reduce our dependence on foreign investors. New industries would be created and so would new jobs. If we had American investors creating new jobs for Americans, wouldn't that help our economy in the long run.

Call me an idealist if you want, but the way I see it we may have some fall out in the economy if everyone saved more and spent less, but ultimately we would be a lot better off.


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