How about: inflation dropped from 26% to 10.9%. Look at your stat and mine in tandem and do you think people were saving less because they didn't need to?You seem to be implying that people saved more earlier because of high inflation. I'd argue the opposite:
Inflation, because it reduces the value of savings over time, will tend to discourage saving (why save if your money will not be worth much later - might as well spend it now on things that will tend to retain their value like gold, real estate, etc..). Therefore, a reduction in inflation should, ceteris paribus, encourage people to save more.
If people were saving less, it was despite the reduction in inflation not because of it.
If one argues that lower inflation = greater economic security = lower savings & increased consumption - then I'd ask why any government in its right mind would seek to combat inflation - since lower savings usually entail lower growth (since growth is determined by the rate of investment divided by the capital output ratio - and main determinant of the rate of investment is the savings rate.) Inflation is undesirable precisely because it undermines thrift, not because it encourages it.
#9508564, By EndlessSolitude RIP Margaret Thatcher
EndlessSolitude 157 posts
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