Newsweek has a cover story that is titled “Stop Saving Now.” This is giving advice about spending some of the money that people have been saving to boost the economy by taking a risk through investing, starting a business or doing something that could put some zip back into the economy.
This may sound good in theory, but our country has never considered saving to be an important part of its financial lexicon in the past few decades, especially not in the last couple generations. Even speculators and venture capitalists are not investing the way they used to – they may not have the money either.
The last few market sessions the Dow has gone up instead of down which is a good thing. The paradox of thrift is making everyone save more than they possibly should but fear is a great motivator. Buying nothing and saving everything could make people swing the other way and start spending recklessly again when they feel more secure.