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Harking back to Keynes and Alvin Hansen, one of the early American Keynesians, Summers warns that modern economies face a chronic problem of deficient demand, or excessive saving (to economists, saving and demand are two sides of the same coin), which, absent some vigorous policy actions, will hold them back permanently.
Mortgage-interest deductions and exemptions from capital gains for residential property both favour excessive saving in property.
Going back to Alvin Hansen, and to Keynes himself, the traditional remedy of centrists and moderate progressives has been to increase government spending and, where necessary, to run sizable budget deficits that can offset excessive saving in the private sector.
But in most of the rich world interest rates were already low; excessive saving was the problem.What is more, the Keynesians asserted, multipliers are much higher during nasty downturns than at other times.
According to the American Psychiatric Association, hoarding occurs in 2-52-5percentf the population and is defined as the excessive saving of items that others may view as worthless.
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He should tackle head-on the corporate sector's excessive savings, for instance, by taxing retained earnings that are not invested.
Unlike Japan, which fell into deep trouble because of an overleveraged corporate sector combined with minimal consumer spending and an excessive savings rate, U.S. mamasans don't control family purse strings.
For example, a growing Chinese middle class will not only help the Chinese economy to rebalance from its current excessive-saving syndrome, but it will also create markets for American companies to sell into China and therefore alleviate the pain of America's overconsumption.
It would boost consumers' purchasing power and squeeze corporate profits, which have accounted for most of the increase in China's excessive domestic saving in recent years.
On the other hand, excessive energy savings neglects the power consumption at the individual nodes; it results network partitioning due to nodes battery exhaustion.
Raising the share of wages in the national income would lower the undistributed profits of corporations and reduce the excessive level of savings.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com