File: //old_home_backup/consumeraffairs.org.uk/public_html-20241004153750/forced-saving.php
<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">
<html xmlns="http://www.w3.org/1999/xhtml">
<head><!-- TemplateBeginEditable name="EditRegion2" -->
<title>Economic Consumer Affairs -
Forced Saving
</title><!-- TemplateEndEditable -->
<meta name="description" content="Socio Economic - Socio Economics" />
<meta name="keywords" content="Socio Economic - Socio Economics" />
<meta http-equiv="Content-Type" content="text/html; charset=UTF-8" />
<script type="text/javascript" src="/js/jquery-1.4.2.min.js"></script>
<script type="text/javascript" src="/js/script.js"></script>
<script type="text/javascript" src="/js/coin-slider.min.js"></script>
<link href="/style.css" rel="stylesheet" type="text/css" />
<link href="style.css" rel="stylesheet" type="text/css" />
</head>
<body>
<div class="main">
<div class="header">
<div class="header_resize">
<div class="logo"> <a href="/index.php"><img src="/images/logo.gif" width="200" height="130" alt="Economic Consumer Affairs Starting your own business" /></a> </div>
<div class="menu_nav">
<ul>
<li><a href="/index.php"><span>Home</span></a></li>
<li><a href="/applied-economics.php"><span>Applied Economics</span></a></li>
<li><a href="/bank-of-england.php"><span>Banks</span></a></li>
<li><a href="/beveridge-william.php"><span>Beveridge</span></a></li>
<li><a href="/capital-stock.php"><span>Capital Stock</span></a></li>
<li><a href="/earned.php"><span>Income</span></a></li>
<li><a href="/economy/UK/economy.php"><span>UK Economy</span></a></li>
<li><a href="/contact.php"><span>Contact</span></a></li>
</ul>
</div>
<div class="clr"></div>
<div class="slider">
<div id="coin-slider"> <a href="/index.php"><img src="/images/slide1.jpg" width="960" height="180" alt="Bank of England " /></a> <a href="/index.php"><img src="/images/slide2.jpg" width="960" height="180" alt="How to make a start with your own business" /></a> </div>
<div class="clr"></div>
</div>
<div class="clr"></div>
</div>
</div>
<div class="content">
<div class="content_resize"><!-- TemplateBeginEditable name="EditRegion1" -->
<div class="mainbar">
<div class="article">
<h1>
Forced Saving
</h1><script type="text/javascript"><!--
google_ad_client = "";
/* links in a line #215670 */
google_ad_slot = "8962789804";
google_ad_width = 468;
google_ad_height = 15;
//-->
</script>
<script type="text/javascript"
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
</script>
<div id="images3"><img src="/economics-imgs/economics-253.jpg" alt="Forced Saving" /></div>
<p>
Forced Saving, the enforced reduction in consumption that takes place when a Government creates money to finance its activities. It works as follows: the Government prints new currency which it uses to pay for armaments, development projects, etc. The effect is to draw capital, labour and raw materials away from the production of goods and services for the private sector to produce for the public sector. But demand in the private sector will not have fallen, although the quantity of goods available to satisfy it has been reduced, so prices tend to rise until demand and supply are made equal at a new higher level of prices. Private citizens have thus been forced to reduce their consumption because they can no longer afford the goods and services they formerly bought, and resources have been released to carry out the tasks required by the Government.<br /><br />This technique for appropriating resources has generally been associated with wars and defence, but in recent times it has been used for development projects in under-developed countries in peacetime. The political and administrative difficulties of raising revenue by taxation in such countries are usually formidable. Forced saving' by inflation is thus an attractive method of avoiding them. But if it generates inflationary pressure it may create more difficulties than it solves: it provokes political stresses because poor people are hurt by the rise in prices and foreign investors may be frightened oil.<br /><br />In economic theory, the concept of forced saving dates back to at least the early nineteenth century, and during the twentieth century it has played a prominent part in many over-investment theories of the trade cycle. A main feature of these theories is that there is an equilibrium, or natural', rate of interest which equates voluntary savings with investment in capital goods and prevents fluctuations in output and employment, if other things remain the same and the level of savings is increased the equilibrium rate of interest will fall. At the lower rate of interest the level of investment will rise to the new level of savings. The economic resources released by the fall in consumption (the increase in savings) will be re-employed by the increase in investment resulting from the lower rate of interest. In a money-using economy, however, the money (or market) rate of interest can be influenced by changes in the quantity of money. An expansion of bank credit can supplement savings, cause the money rate of interest to fall below the equilibrium rate and increase investment expenditure. There is then no reduction in the demand for consumer goods, and so no release of economic resources for investment. The increase of investment expenditure is a net addition to total monetary outlay, and the economy will thus be subject to expansionary and inflationary pressure whenever the money rate of interest is less than the equilibrium rate, or, alternatively, whenever investment exceeds the level of voluntary savings appropriate to the money rate of interest. To the extent that the excess monetary demand causes prices to rise, real incomes fall, consumption in real terms is reduced and forced saving takes place to release resources for the production of capital goods.<br /><br />The term forced saving could be applied to the saving of Governments. By securing a budget surplus on current account through taxing more than is required for public expenditure, a central Government can extract funds from the public which can be used to finance investment in roads, equipment for coal mines. railways. It can be said that the community has been made to yield forced saving measured by the amount of the budget surplus.
</p>
<h2>
NextSocio Economic - Socio Economics
</h2>
<ul>
<div id="images4"><img src="/econ/images-economy-601.jpg" alt="Forced Saving" /></div>
<li><a href="/forecasting-predicting.php"> Forecasting Predicting </a></li>
<li><a href="/trade/UK/free-trade-area.php"> Free Trade Area </a></li>
<li><a href="" target="_blank"> Economics - University Of Oxford </a> <img src="/images/icon_external.gif" width="9" height="9" /></li>
<li><a href="telegraph.co.uk" target="_blank"> Http://www.telegraph.co.uk/education/universityeducation/degree-courses/8547272/economics-degree-course-guide.html </a> <img src="/images/icon_external.gif" width="9" height="9" /></li>
</ul>
<br />
<p>
<spc: %other />
</p>
<div class="clr"></div>
</div>
</div>
<!-- TemplateEndEditable -->
<div class="sidebar">
<div class="gadget">
<h2 class="star"><a href="/index.php">
Forced Saving
</a></h2>
<div class="clr"></div>
<script async src="//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script>
<!-- spamdex-display -->
<ins class="adsbygoogle"
style="display:block"
data-ad-client="ca-pub-2121528995419082"
data-ad-slot="8029362605"
data-ad-format="auto"></ins>
<script>
(adsbygoogle = window.adsbygoogle || []).push({});
</script>
</script>
<script type='text/javascript'><!--// <![CDATA[
OA_show(53);
// ]]> --></script>
<p><a href="/index.php">Economics</a> uses everyday words in a more specific sense than that in which they are used by the non-economist. 'Demand', 'supply', cost', 'market', 'rent' and many other words do not mean the same to economists as they do in everyday usage.<br />
</p>
<p><strong>Recent Reads</strong><br />
<a href="/bank-of-england.php">Banks</a>
<a href="/capital-stock.php">capital</a>
<a href="/markets/economics/debt-conversion.php">debt</a>
<a href="/division-of-labour.php">labour</a>
<a href="/trade/UK/growth-economic.php">economy</a>
<a href="/hume-david.php">David Hume</a>
<a href="/land-tax.php">land tax</a>
<a href="/law-economic.php">law</a>
<a href="/marx-karl.php">Karl Marx</a>
<a href="/pension-term-used.php">pensions</a> <br />
. </p>
<p><a href="http://www.economist.com/business-finance" target="_blank"><img src="/images/econm.gif" alt="<spc: %meta_title />" width="267" height="553" border="0" /></a></p>
<p> </p>
</div>
</div>
<div class="clr"></div>
</div>
</div>
<div class="fbg">
<div class="fbg_resize">
<div class="col c1">
<h2><span>consumeraffairs.org.uk
</span></h2>
<p>Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk
site is therefore not a final statement of economic doctrine.<br /><br /><strong>Economics</strong> is in the last resort a technique of thinking. The reader will therefore need to make an intellectual effort, more substantial for some web entries than for others, to get the most interest and value out of this website.<br />
</p>
</p>
</div>
<div class="col c2">
<h2>Ecomical Favourites</h2>
<ul id="spcFooterLinks"><li><a href="/forced-saving.php" title="Forced Saving" alt="Forced Saving">Forced Saving</a></li><li><a href="/forecasting-predicting.php" title="Forecasting Predicting" alt="Forecasting Predicting">Forecasting Predicting</a></li><li><a href="/forecasts-forecasts.php" title="Forecasts Forecasts" alt="Forecasts Forecasts">Forecasts Forecasts</a></li><li><a href="/foreign-balance.php" title="Foreign Balance" alt="Foreign Balance">Foreign Balance</a></li><li><a href="/foreign-investment.php" title="Foreign Investment" alt="Foreign Investment">Foreign Investment</a></li><li><a href="/forward-exchange-rate.php" title="Forward Exchange Rate" alt="Forward Exchange Rate">Forward Exchange Rate</a></li><li><a href="/free-economy-one.php" title="Free Economy One" alt="Free Economy One">Free Economy One</a></li><li><a href="/free-enterprise.php" title="Free Enterprise" alt="Free Enterprise">Free Enterprise</a></li><li><a href="/free-exchanges.php" title="Free Exchanges" alt="Free Exchanges">Free Exchanges</a></li><li><a href="/free-trade-trade.php" title="Free Trade Trade" alt="Free Trade Trade">Free Trade Trade</a></li></ul></div>
<div class="clr"></div>
</div>
</div>
<div class="footer">
<div class="footer_resize">
<p class="lf">© Copyright 2018 | <a href="mailto:contact@consumeraffairs.org.uk">contact@consumeraffairs.org.uk
</a> |<a href="http://www.economics.ox.ac.uk/" title="Economics" target="_blank"> Economics</a> | <a href="https://www.sandrajonaspublishing.com/">Sandra Blackbush Publishing Unlimited</a> | One Heddon Street | Mayfair | London | W1B 4BD | Consumer Affairs was a not-for-profit organisation offering free advice about debt and money management via guides and reports on its website. </p>
</div>
</div>
</div>
<script type="text/javascript">
var _gaq = _gaq || [];
_gaq.push(['_setAccount', 'UA-31916544-1']);
_gaq.push(['_trackPageview']);
(function() {
var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true;
ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js';
var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s);
})();
</script><script>
(function(i,s,o,g,r,a,m){i['GoogleAnalyticsObject']=r;i[r]=i[r]||function(){
(i[r].q=i[r].q||[]).push(arguments)},i[r].l=1*new Date();a=s.createElement(o),
m=s.getElementsByTagName(o)[0];a.async=1;a.src=g;m.parentNode.insertBefore(a,m)
})(window,document,'script','https://www.google-analytics.com/analytics.js','ga');
ga('create', 'UA-87073664-1', 'auto');
ga('send', 'pageview');
</script></body>
</html>