Saving Grace

When it's all mixed up
Better break it down
In the world of secrets
In the world of sound
--Tears for Fears

Mr P reminds us that we can't get out of a debt problem by taking on more debt. While self-evident, it seems we're constantly in need of this reminder.

Standard of living improves over time by investing capital towards productivity improvement and innovation. This capital comes from saving a portion of real income.

The progression works like this:

savings->investment capital->productivity improvement->higher standard of living

Current government 'stimulus' programs that require borrowing from others or simply printing money to fund projects have no place in this progression because they are not savings.

Until we save, we'll lack true investment capital and standard of living will consequentially suffer.

Don't get distracted by eloquent arguments to the contrary. It's really that simple.