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Originally Posted by legend
I was shocked, in china everyone saves 40% of their income, we'd be in a very different position if that was the case in the west
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Yes, that's true. We'd be way worse off:
http://en.wikipedia.org/wiki/Paradox_of_thrift
An excerpt:
The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth.