What is the thrift paradox?
Paradox Thrift is an economic theory represented by John Maynard Keynes, a well -known economist of the 20th century. According to Keynes, when people start saving money instead of spending it in response to growing concerns about the recession, they can really make the recession worse, while the total savings rate remains the same. This argument is often used to promote consumer expenditures in a period of economic uncertainty and led numerous governments to spend strong spending during the recessions in an effort to prevent these events from deteriorating. Expenditure on its equipment. These released workers do not have any expenses, and therefore cause other businesses to fit because they are beginning to experience a decline in customers and more than tija, the recession is growing deeper and people hang as much money as they can, instead of spending them.
When the Paradox of the Savings Bank enters into force, the total rate of savings in society remains the same because while GodMembers of the company may be able to put a large amount of money in savings, people in lower classes have no savings because they do not have a job. If savings are averaged across the entire population, low and high savings at the opposite ends of the class spectrum will effectively cancel each other.
People call this theory "paradox" because this is a case where seemingly beneficial behavior is actually harmful. While individuals actually benefit from the selection to save money instead of spending it, society like the whole experience is experiencing economic problems when a large number of people start to save money. It is expected that this theory is valid for consumers who pay their debt instead of spending money or saving them.
Numerous criticisms were settled against the paradox of Thrift, which is a reminder that this principle in economics is theory , not the fact. Some people have claimed that when demand falls, prices will fall, and this will start a nit againThe growth of demand, so the savings paradox is not nearly as harmful as it has been proposed, because the demand rarely falls below a certain level. Others have said that money in savings is borrowing means, which means that by putting money into the bank, someone can benefit their community by being available to people who need to borrow them.