Money is made round to go 'round
All things in balance
Saving is a good thing, right? But if everyone is thrifty and stops spending, the economy stalls.
Somewhere there is a balance, where people set aside some of their earnings, but keep spending.
Meanwhile, central banks walk a fine line between supplying enough cash to keep the economy moving, but not so much that an inflated money supply brings overheated pricing. If there's lots of cash available, interest rates are low, so that should encourage producers to borrow and expand their output.
At the same time, if there's lots of cash available, prices leap and consumers don't buy. If they don't buy, they have to put the cash somewhere. But interest rates are low, so there's no point in saving. However, prices are so high that there's no point in spending. And if no one is spending, there's no point in expanding production.
Is a puzzlement, said the king.
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