I should be studying...but the economy is too interesting

I really should be studying so I'll make this short.

 Please post a comment if you don't agree with something i say or if it doesn't make sense.  I really didn't get to reread it...

If you watch the news or read about the current economic situation they keep saying that we need to spend more.  Spending is the key to getting out of this recession.  And yes, while that may be true, lets not forget that it was our negative (or close to zero) saving rate that helped get us into the current situation.  People were spending more money than they had.  For the last decade people enjoyed refinancing their house so they could buy a new Escalade.  Housing prices and the stock market in general were expected to go up forever at a rate never seen before.  3 percent growth wasn't adequate anymore.  Sure, it's the growth rate we experienced for close to a century but something; yes something fundamentally changed that allowed for five and six or even ten percent growth.  Well, actually nothing fundamentally changed and now we are paying the price with market volatility and massive unemployment.  

 

Here's the kicker.  People are finally saving!  I know, it's a crazy thought not to spend everything you make.  The uncertainty in the economy is making people reevaluate what they need to buy and what they should save.  Sure, the saving percentage might swing too far in the other direction (I doubt it) but the idea of saving has returned to America.  This is where I begin to get nervous.  What do we expect the economy to look like when we eventually get out of this recession or dare I say eventual depression?  What will our GDP growth look like if people begin to save instead of spending everything?  I need to wrap this up so here comes my conclusion.  SAVING CAN CREATE GROWTH!  When you give your money to a bank they don't just keep it in a huge vault.  They lend it to entrepreneurs which in turn creates growth.