The people of this country are at their limits. As I have already noted this week, despite supposed record numbers of people in work real and notional incomes are falling, which is not what economic theory says should happen in that situation.
And, to make matters worse, the UK population are saving less than they ever have. This data on the so-called savings ratio is from the ONS:
The reality is that people simply do not have enough left over to save. Margins have been cut to the bone. And a decline at the rate now being seen is quite extraordinary.
It is amusing that his “already noted” links to his own blog, of this week, which shows that real wages are rising.
But what is really amusing is that he’s, once again, showing that he just doesn’t have the background in this economics stuff. For he’s missed a central Keynesian point, the paradox of thrift. In economic bad times people, individually, try to save. It’s entirely rational that they do as well, they are facing increased risk. It also rather buggers the economy, increasing the depth of the recession, as people in aggregate save instead of spend.
Thus a standard part of fighting a recession is to try and reduce the savings rate. One reason to lower interest rates for example, to make saving less attractive. That is, in economic bad times, we actively strive to reduce the savings rate.
Kartoffel is complaining both about our being in recessionary times and also that the savings rate is declining.
If only the Professor of Practice in International Political Economy knew anything about economics, eh?