Debunking Economics - the podcast Debt, savings and investments – how they really work
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Aug 7, 2024 Explore the puzzling dynamics of savings and debt, where often, money saved is merely slated to pay off existing loans. Discover how increased savings can paradoxically dampen consumer spending, affecting business investment. Dive into critiques of traditional economic theories, revealing how soaring housing prices and personal debt reshape our financial landscape. Hear arguments for innovative solutions to tackle economic inequality while questioning the notion that more savings leads to greater investment. Unpack these intricate financial relationships!
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Societal Savings
- Individuals can save money, but societies as a whole cannot.
- Increased individual savings only slow down the circulation of existing money, not create new money.
Offset Mortgages
- Offset mortgages allow individuals to overpay and redraw, effectively merging savings and debt.
- Banks discourage this as separate accounts generate more profit through interest rate differentials.
Pandemic Savings and Inflation
- Increased savings during the pandemic, fueled by government spending, contributed to inflation.
- This excess cash intensified demand, while supply chain disruptions limited availability, driving up prices.