And slowly, slowly we're bringing it up to a moderate savings rate. And then it's a high savings rate.

And then it's a high savings rate.

Incredibly, Japan was told to run huge budget deficits (reducing government saving) to boost domestic demand.

And slowly, slowly we're bringing it up to a moderate savings rate.

US advice was cut the savings rate.

Meanwhile, China s savings rate remains stubbornly high.

Employment and incomes soared, and savings piled up.

Do you know why savings was so high?

Its savings rate has been distressingly low for decades.

Moreover, as Japan s society ages, the household savings rate will decrease dramatically.

The saving rate in China is the highest of any major country.

At 19 of GDP, national savings rates are very low indeed, much lower than in Asia and labor legislation is antiquated, discouraging efficient use of human capital, while productivity growth is meager.

This was World War II. Do you know why savings was so high?

This remarkably low level reflects both the small share of household income in total GDP and the high rate of household saving.

A global savings glut would suggest that rebalancing the world economy requires policies to boost America s savings rate and to increase non US households consumption.

A savings rate of 50 of GDP is too high under any circumstances, and household consumption equivalent to 35 of GDP is too low.

BEIJING China s national savings rate has been very high in recent years, amounting to 52 of GDP in 2008 (the most recent year for which statistics are available), and is often blamed for today s global imbalances.

As a result, the country s household savings rate will decrease dramatically, making it increasingly difficult for the private sector to finance budget deficits.

By contrast, the saving rate in the United States is the lowest of any major country roughly 10 of GDP.

They also tolerate enterprise or government policies that encourage high saving.

The US must improve the education and skills of significant parts of its labor force, so that they can produce more of the high quality knowledge and service sector exports in which the US specializes. Higher incomes would boost US savings, reducing households dependence on debt, even as they maintained consumption levels.

Higher incomes would boost US savings, reducing households dependence on debt, even as they maintained consumption levels.

Interest rates are more than a mere economic input that determines levels of saving and investment.

In the early 1980 s, China s saving rate was twice as high.

China must recognize that high savings will not provide stable growth over the long run.

Then came East Asia, which had high savings rates, so the new explanation was governance. 160

A study in 2000 of saving rates in 150 countries, headed by Norman Loayza at the World Bank, found that some basic economic factors explained much of the variation in national saving rates, without any reference to cultural differences.

This would require, for instance, stimulating growth in Europe, Asia, and the major oil exporters in order to offset the contractionary effect on the world economy of adjustment in the US, which should include more restrictive fiscal policies, less private consumption, and higher domestic savings to reduce its external deficit.

Surprisingly, the study found that saving rates tend to be high when inflation is high, and to decline when inflation declines.

The vast majority of Latin America countries do not fulfill any of these requirements.

Household disposable income is about 60 of national income in China, and the household savings rate is close to 30 of disposable income.

Since inflation has been declining in most countries of the world over the last 20 years or so, this could help explain the global decline in saving rates.

Automatic Savers

Tom has no savings.

I have no savings.

First, they must accumulate capital, which implies a high savings rate that will help pay for new machines, equipment, and infrastructure.

The high rate of household saving in China reflects many factors, including the risk of job loss and the lack of a reliable government pension program.

But that is the point despite the vast attention currently paid to the looming old age crisis, household saving rates have been falling in most of the world's rich countries.

Thus, by encouraging the purchase of health insurance by individuals or employers, the Chinese government could reduce significantly the overall household saving rate.

He pointed to limited supply capacities and low levels of domestic savings as the main factors impairing the ability of these countries to benefit from trade preferences.

The creation of internal financial markets and the expansion of revenue are hampered by the low level of savings and the limited cash flow in the economy.

Two thirds are not saving now.

If you save very little, the future self is unhappy

Before it began rising last year, the US household saving rate had been declining for more than 20 years in response to the increasing level of household wealth.

Household income must rise, and, with more ample provision of social security, insurance, and services, precautionary savings should fall.