Economy shrinks by 1.6%

Generali

Sir_Humphrey wrote: »

What determines saving rates then?

Many things.

Cost of money (interest rates)
POV of the future
Immediate needs
Tax treatment of savings

Most of these things are cumulative - economics is complicated which is why politician economics (ni Tory nor Labour) never really works. Macro economics is the amalgamation (in the UK) of 60 million people's decisions. It is almost never seen in that way but that's all it is.

If your missus decides to have a coke rather than a glass of wine when you go out for your birthday then that's a macro decision as well as a micro one.

Do you disagree? Can you come up with a better theory? These economics theories I post on here are mostly my own and I really don't claim to have some great insight that nobody else has.

Sir_Humphrey

Generali wrote: »

Many things.

Cost of money (interest rates)
POV of the future
Immediate needs
Tax treatment of savings

Most of these things are cumulative - economics is complicated which is why politician economics (ni Tory nor Labour) never really works. Macro economics is the amalgamation (in the UK) of 60 million people's decisions. It is almost never seen in that way but that's all it is.

If your missus decides to have a coke rather than a glass of wine when you go out for your birthday then that's a macro decision as well as a micro one.

I agree - I was originally arguing against the idea that IRs alone would determine it. I then went on to say that income was the main (not only) determinant. Everything you mention above is discretionary, but if you have no income, or only enough for the essentials, you will not save, no matter if you want to do so or not.

A lot of what you mention cancels out at a macro level BTW.

Generali

Sir_Humphrey wrote: »

I agree - I was originally arguing against the idea that IRs alone would determine it. I then went on to say that income was the main (not only) determinant. Everything you mention above is discretionary, but if you have no income, or only enough for the essentials, you will not save, no matter if you want to do so or not.

A lot of what you mention cancels out at a macro level BTW.

I agree with all your points bar the last sentence which I don't understand.

Can you explain please?

Sir_Humphrey

Generali wrote: »

I agree with all your points bar the last sentence which I don't understand.

Can you explain please?

Immediate needs given a particular situation vary for person to person, and are often based upon a whim. They can be treated as random caprice. The larger the population, the more likely these effects are to cancel each other out, in same way that a larger sample cancels out most statistical noise.

Now in some cases this does not happen, but for the most part it does. Most hard sciences such as Chemistry rely on this epistemic idea, so denying it would demolish more than just economics. To draw an example from Chemistry, variations in the relative positions of electrons in an atom only have a small impact above the atomic level (Van der Waals forces).

I am not putting economics on such a high pedestal, I am just pointing out that if you use too strong a criticism of economics, you can throw out real science with the bathwater.

kennyboy66_2

Generali wrote: »

That is economic orthodoxy. Economic orthodoxy isn't always right however....

What have average saving rates been in the US and China over the past few years?

China has been (IIRC) approximately 30% of income. US about -2% of income.

Average Chinese incomes have been a fraction of those in the US over the period.

My view is this.

The increase is saving rate has been generated by both fear and the savings in mortgage payments that people who are on trackers or variable rates are enjoying.

I really doubt if the savings rate in Q4 would have been so much if interest rates had been still at 4-5%.

ad44downey

Cleaver wrote: »

Your continous, simple one-line, negative posts are fast becoming my highlight on this forum. Sorry to be harsh, but it's like there's an ad44downey machine that someone presses and it produces your posts for you:

"I think this shows that Brown's systems will simply not work."

"These sleazy BTLers will all die over the next four years and quite right too."

"We will see an even bigger depression that the '30s".

Brilliant stuff, keep it coming.

This may or not suprise you but I couldn't give a monkeys what you and the trolls johnbravo and dithering dad think! If you don't like what I post then put me on ignore. And stop whingeing everytime I post something because you certainly won't stop me. Now put that in your pipe and smoke it. lol

Cleaver

ad44downey wrote: »

This may or not suprise you but I couldn't give a monkeys what you and the trolls johnbravo and dithering dad think! If you don't like what I post then put me on ignore. And stop whingeing everytime I post something because you certainly won't stop me. Now put that in your pipe and smoke it. lol

Y'see, that's much better. A bit of passion, a bit of personality and more than 20 words. I like it.

mewbie_2

Cleaver wrote: »

Y'see, that's much better. A bit of passion, a bit of personality and more than 20 words. I like it.

Whereas yours was only 20 words.

Cleaver

mewbie wrote: »

Whereas yours was only 20 words.

It's a nice, sunny Friday afternoon in my neck of the woods. Stop counting my words and go for a beer. Like I'm about to do.

mewbie_2

Cleaver wrote: »

It's a nice, sunny Friday afternoon in my neck of the woods. Stop counting my words and go for a beer. Like I'm about to do.

Twenty-six.

This troll sock thing is affecting me.