Re: what is the paradox of thrift

From: John Conover <>
Subject: Re: what is the paradox of thrift
Date: 13 Oct 1999 09:13:58 -0000

Markku Stenborg writes:
> Often, people think:
> - saving = good, responsible, necessary for accumulation of wealth;
> - spending = naughty, irresponsible.
> If an economy has under-utilized resources, ie, high unemployment,
> increased spending and decreased saving will lead to higher income.
> Then, spending = good; saving = bad.
> OTOH, in the long run, high saving rate (= low spending rate) is
> needed for high amount of investments which is a prerequisite for
> rapid growth. Then, spending = bad; saving = good.

Sounds kind of like a Godelian issue-a paradox of logical recursion,
eg., self-referentiality; if everyone saves, no one should; and, if no
one saves, everyone should.

I don't know if it is true, or not, but if it is, static equilibrium
solutions that are free from contradictions to the thrift/savings
problem do not exist. That would make it tough to make a verifiable
science out of it.



John Conover,,

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