One view is that their surpluses were a corollary of the policies favoring export led growth that worked so well for so long. China s leaders are understandably reluctant to abandon a tried and true model.

Whereas excess liquidity is inflationary and calls for higher interest rates, excess saving is deflationary and calls for lower rates. This brings us to the dilemma faced by central banks.

But this obscures the real issue, which is excessive government expenditures.

Cut Now, Save Later

My savings will soon run out.

My savings will run out soon.

America s Saving Rate and the Dollar s Future

Savings are, of course, no bad thing.

Both features increased global savings.

So they save massively.

He gambled away his life savings.

Many people have lost their savings.

Tax cuts were supposed to stimulate savings, but household savings in the US have plummeted to zero.

And that is precisely the goal of negative interest rates In a world where supply outstrips demand and too much saving chases too few productive investments, the equilibrium interest rate is low, if not negative.

A large fiscal deficit increases the need for foreign funds to avoid crowding out private investment. Put differently, the value of the dollar reflects total national saving, not just savings in the household sector.

Put differently, the value of the dollar reflects total national saving, not just savings in the household sector.

You can bet your life savings on it.

American households are saving again.

America's appallingly low savings rate.

Millions of persons lost all their savings.

Millions of people lost all their savings.

Tom bought a car using his savings.

I spent all the savings I had on this.

His savings will soon amount to one million yen.

He keeps all his savings in the bank.

And savings are particularly good for developing countries.

Economics explains all jobs, prices, savings, houses.

He keeps all his savings in the bank.

In normal times, there are valid reasons for paying interest on excess reserves.

Only earnings taken out in time can be secured.

So why have so many different countries experienced a decline in savings?

National saving has two components private and public.

Our financial wealth is not liquid in an emergency.

Tom keeps his savings in a shoebox under the bed.

Moreover, investment in public infrastructure and urban facilities will not create industrial over capacity instead, it will provide long term public consumption durables that households and companies will use for years to come.

It turned out that there was enormous excess capacity, and import substitution soon began, even in the midst of financial turmoil.

Despite all this, massive excess bank reserves remain unlent.

The most fundamental reform of housing markets remains something that reduces homeowners overleverage and lack of diversification.

Government savings have fallen, especially in the United States and Japan, and household savings have virtually disappeared in some countries with housing booms.

But it s theoretical nihilism, Cochrane argues, to ascribe these excessive fluctuations to irrationality as Krugman does.

These numbers reflect the fact that IMF advice to countries facing budgetary pressures emphasizes the importance of sustaining expenditures on health and education. The Fund urges that savings be found in unproductive spending meaning excessive military spending, subsidies for the well to do, and inefficient administrative practices.

But this shouldn t be a threat at all, because the world has ample reserves of these elements.

The Fund urges that savings be found in unproductive spending meaning excessive military spending, subsidies for the well to do, and inefficient administrative practices.

Perhaps gold, a store of value impervious to physical distortion, could make a comeback.

Keith Chen Could your language affect your ability to save money?