Output is growing: I won’t deny it if that’s what the ONS says. But a boost in growth based on the household savings rate falling, business re-stocking after a period of such low confidence, …… is not a sustainable recovery. It is structural recovery, but the structure is all wrong.
Isn\’t that just fascinating. Keynes went on about how when you\’re in a recession then the last thing you want anyone to be doing is saving. In fact, the aim of economic policy should be to get people to dissave: to get the money out there and working in the economy not languishing around in savings accounts. This will increase business confidence, lead to restocking and we thus boost the economy up to a better and higher equilibrium state than we had when everyone was just sitting on their money.
So now Ritchie, one of the country\’s leading economists as we all agree, tells us that Keynes had it all wrong. Declining household savings is just terrible as it increases business confidence and leads to restocking…..or maybe Ritchie\’s not really grasped what Keynes was in fact saying?