A couple of days ago, while watching CNN Money, a reporter said, “Saving money, paying off your debt, and cutting down your expense is a great idea to manage your personal finance. If, however, every American starts doing this, it would worsen the economy.”
Though it might have made some sense to them, this sentence is utter crap. No, I think it makes a bit of sense, but they are missing the main part.
After doing endless research, I realized few factors are affecting the growth of our economy. We are facing such a crisis due to similar reasons. But how could savings be a problem. It was spending, actually overspending, that led us into this crisis situation. Though spending boosts the economy, we were wasting too much of borrowed money.
I still remember a the economic situation of the US in 2005-06 when saving rate fell considerably, [...]