When Everyone Tries To Save Money, Who Actually Loses?

[Opiate32]

Saving money is generally seen as a good thing. Spend less, keep more and you have a better chance of staying financially stable but I start to think about what happens when a lot of people start doing the same thing at the same time. If people become very careful with their spending then businesses sell less. Some businesses may respond by cutting cost or reduce staffs. That can then affect people’s incomes and make them even more cautious about spending.

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

[Ruttoshi]

Since, it's not everyone that earn the same amount of income and can save the same amount of money, it wouldn't change anything if everyone save at the same time. Don't you see that majority of people have banks that they keep their money for savings. Most government workers little part of their salary goes into a pension scheme and that didn't affect anything.

You should know that you can only save when you have more than enough to take care of your monthly expenses and  basic needs and it's not everyone that their income can have a discretionary income which makes it impossible for everyone in a country to save money at the same time and keep it over a long period of time. It's better to buy bitcoin than save your money in the bank.

[m2017]

Saving money is generally seen as a good thing.

Moderation (in spending) helps preserve wealth, whereas excessive consumerism leads to wastefulness and the loss of wealth.

In reality, it is more productive to focus on new ways to earn money than to try to save.

Spend less, keep more and you have a better chance of staying financially stable

There are some nuances. For instance, in what form will you be saving? If you save in traditional currency, then unfortunately, you will lose more than you save (due to inflation).

but I start to think about what happens when a lot of people start doing the same thing at the same time.

People start cutting back en masse during tough times, when inflation "eats up" a large portion of the budget due to rising prices for goods and services.

If people become very careful with their spending then businesses sell less.

Of course, falling, but inflation (traditional economic model) is to blame for this, not people's frugality.

Some businesses may respond by cutting cost or reduce staffs.

Because, just like ordinary people, they are trying to "survive" and optimize their business (losses, expenses).

That can then affect people’s incomes and make them even more cautious about spending.

Yes, in this world, we are all economically interconnected. A "difficult financial situation" in one sector inevitably ripples out to others, affecting ordinary people along the way.

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

So, what are you proposing? That millions of people start increasing their spending, using borrowed money, say, to save the economy? I repeat: everything is interconnected. I would also add that this is simply how the current global economic model is structured, a model that will likely undergo some changes in the future. For instance, "expiring" digital cryptocurrencies (CBDC) could be used to artificially and forcibly stimulate the economy by compelling consumers to raise or lower their consumption at specific times.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Your question is overly philosophical. Any action inevitably entails both harm and benefit, whether to the individual or to others. That is simply how the world works. So, what would you choose: the survival of your family, or benefiting the national economy?

Consider another example: you buy an asset (bitcoin), hold it for ten years while it appreciates, and then sell it for ten times the original price. By doing so, are you inflicting financial harm on the new buyer? That is the nature of the market - and of life itself: there is always a winner and a loser, and the weak (be they individual market participants or businesses) lose out and "die off".

[Free Market Capitalist]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Actually, no—but that’s because you didn’t mention the most important part in your text: channeling savings into investment. The countries that make the most progress are the ones that invest and reinvest the most in capital. Saving as an individual is fine up to a point—having an emergency fund, saving to buy a good or service… But beyond that, it doesn’t make sense to save because you lose purchasing power due to inflation. If you invest your savings, you protect yourself from inflation and contribute to development.

[sunsilk]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Not really because the government will do everything it can for savers to spend their money. You'd see them do some programs in order people to take their money's in the bank and spend it.

They'll allot some distribution or discounts that the government will take care of. Subsidizing things and that means a lot for people who would see some opportunity it so that outflows from savings will come.

[Asuspawer09]

Generally, it wasn't a bad thing; it could be a good thing for sure, since saving could help you financially to have a good foundation on your finances, spending less on some unnecessary things and just keep on stacking up money could help you since you now have the funds to invest and have a strong financial foundation. I mean, it doesn't look great to others since saving wasn't a good thing on inflation long term, but you would still need to stack up for emergency funds, health funds, etc.

I can't see why it is going to be harmful for others if everyone is going to do it at the same time. I mean, if everyone is going to save money, then it is a good thing; it might even help the economy long term since they might be doing well in life. Usually, it would increase the social classes of the country if most of the people in that country have a huge amount of money, just like other countries, for example, third-world countries or low-income countries, compared to superpowers.

[Russlenat]

Your question is wrong because  it's impossible that everyone will try to save money.
Therefore i will not answer it.


These countries cannot even save as they struggle with their basic needs.
According from WB, they have a negative domestic savings.

Somalia — around -41.5%
Lesotho — around -33.2%
Comoros — around -10.4%

[asriloni]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

Yes, it's possible, why not? When massive amount of people chosen to save their fund instead of spending it, it will trigger paradox of thrift to happen. Less money goes to the economic circulation will cause less demand, which will be weakening all of sectors. You will see massive lay-off to happen because any business can no longer operated due to the lack of revenue.

Saving is good when it comes to the individual decision, but when millions people do it at the same time. It's a way to kill the economic of a country. So just don't it.

Bro, economic is like a whell. When too many people prefer to save over spending, it's like they're stopping the whell.

[atookz]

Source: The Paradox of Thrift (Underconsumption and Oversaving) Explained in One Minute

This actually already has a name, the paradox of thrift. It is a concept of John Maynard Keynes. Saving is a good thing for every person, but if everyone saves at the same time, spending decreases, businesses slow down and ultimately people's wages and income are impacted as well.

But it's not all the time bad tbh. The banks typically lend out savings in the form of loans to businesses. The issue is that if the economy is not doing well and the money is just sitting there, doing nothing, like in Japan in the 90s. Usually small businesses, such as small shop, restaurants, retail are the ones who feel the impact the most.

I would say, yeah, that might be fine, but that's a problem when everybody's doing it at the same time, particularly with the economy already weak.

[Agbe]

If everyone spends less and save more , there is going to be done negative effects that will come as a result of money not been in circulation. When it comes to finance it is actually when money circulates that value is going to be created, because there is transfer of money from one hand to the other. This is also one reason that government prints money from time to time just to keep the economy afloat via printing of money so that money can be in circulation. But the good thing about this is that, there can't beat time when everyone is going to spend less and save his money in the bank, human being are dynamic and so people behave differently there are those who likes spending money while there are also those who spends with caution.

[Cityhunter34]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

There is absolutely no way you would save money without spending money on something else. In fact, I don't think it will affect anything because our source of income are not the same, as you can only save according to your pocket and also spend according to your pocket.

So I don't think it's worth worrying about, since we can't stay without buying stuff for our families. It would have been different if humans could stay without buying anything, but it's obvious that one can't live by bread alone.

[ruykeri]

Although it seems theoretically possible in reality it is not often seen. If we consider a community or a country, then most of the people in a country will save together, it is not possible. Because the lifestyle and mentality of all people cannot change together. If a person responsibilities are less, he may think about the future and focus on saving by reducing his expenses. But because another person's responsibilities and expenses are more he cannot reduce his expenses even if he wants to. It is not possible for him to make savings. And the economy of a country is active on the more transactions in the currency of that country. There are some mandatory expenses that people need, which cannot be reduced even if they want to. Such as medical cost, education cost or family expense. Even then many people save but that money is not actually locked in the bank. The bank lends that money to others. They buy or invest assets with the loan. So ultimately the mentality of all people will not move towards any fixed goal together. So it will not be possible for everyone to save together.

[Mayor of ogba]

Saving money and spending less is quite good and reasonable because you will always have what to fall back to when you have emergencies. It isn't possible for everyone to save money in a country but if we assume everyone is saving money instead of spending, I think those saving money will be on the losing side, because with the high rise of inflation across the world when the people who prioritized saving money and spending less will want to use the money they saved to buy something, the money will lose it purchasing power.

[EluguHcman]

Saving money is generally seen as a good thing. Spend less, keep more and you have a better chance of staying financially stable but I start to think about what happens when a lot of people start doing the same thing at the same time. If people become very careful with their spending then businesses sell less. Some businesses may respond by cutting cost or reduce staffs. That can then affect people’s incomes and make them even more cautious about spending.

What makes it tricky is that nobody is necessarily doing anything wrong. For an individual, saving more during uncertain times can be a smarter decision but if millions of people make that same decision at once, the effect on the economy could be different.

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

The whole of them saving their funds in cash will go broke because inflation will keep hitting the economy that the fiats keep loosing its values and over the long time of hodling and stacking in fiats, you will see the harm you have caused to yourself.

I think you should be talking about storing the funds in some resourceful assets that has the potential to hedge against inflations which may include investing in Bitcoin, stocks and real estates where the values of your funds increases over the long term of your savings.

It is also unimaginable to oversight everyone holding on fiats because it is a very big mistake that not everyone will fall into it but if Paraventurely, that everyone including the world and political leaders would be affected and there should call a reform economy system but I know it is impossible due to its dangers of setting back the economy with broke people everywhere.

Think of how people are even going to die because of it as there will be need to get proper medications, shelter, food, cloths, education and the rest. So how much do you think we can save and what would be the essence of the savings?

[WatChe]

Actually, no—but that’s because you didn’t mention the most important part in your text: channeling savings into investment. The countries that make the most progress are the ones that invest and reinvest the most in capital. Saving as an individual is fine up to a point—having an emergency fund, saving to buy a good or service… But beyond that, it doesn’t make sense to save because you lose purchasing power due to inflation. If you invest your savings, you protect yourself from inflation and contribute to development.

Spending less money is good but saving your money in bank without investing it is not a good strategy. You can't improve your financial status, if you keep on stacking up your savings because that will not generate any profits for you over the years rather that money will lose its value. If someone want to improve his financial status in future then one must invest money at his disposal in some profitable venture either its big or small. That will be beneficial for you as an individual and economy of the country as well because money goes in circulation.

[MArsland]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

This scheme can create chaos but I am not sure that there will be money saving simultaneously in one time, because it is impossible for people to survive without actually buying something.  Let say, if it happens the loss is the government because when people's purchasing power decreases, the money circulation is automatically disrupted and it results in all forms of transactions slowing down.

[Dr.Bitcoin_Strange]

Which brings me to this question; can something that is financially responsible for an individual become harmful when almost everyone does it at the same time?

First you have to understand that there's no way everyone can do so at same time, in these economy where people are looking for means to even earn extra income, saving in the bank or through other methods without any interest attached is what a lot of people are not doing again like people, people wants their money to work for them now, they want to invest in something and get good returns. Saving to invest is good, perhaps the money will still go into the economy but keep you money just in one place where it's not generating any yield will not even do you good. Again, there are low income earners who probably might not even be able to save anything, they always earn, spend, take loan and repay, and it keeps going on like that.

[traderethereum]

Maybe only small percentage who will save money than spending so that will not harm business. The business will still have their loyal customers who will buy goods from them and more new customers will come. If the business really have a good product, that will be consideration for customers to stay with them.

Those who save money will not just save money, they use the money buy and fills their needs or just spending. Maybe sometime they buy goods or other products although not too often but still they supports the business to run. No need to think too much about save money can makes business losses its customers because the market will have larger customers.

[bangjoe]

When many people save money and spend less, the loss is business actors whose goods expire faster, and of course at leisure a large scope of the country has decreased economic growth, because if the flow of funds stops in the hands of the public automatically stops the circulation of money, the state can also lose because it will not get taxes from every transaction that should rotate.

Therefore, the shopping impulse is always supported by the government to rotate the national economy, when entrepreneurs run well which is the impact of economic turnover, the country can be safe.

[danherbias07]

It's the economy of the country that will suffer. This has happened before in many countries because people are trying to save their money for many reasons.

The effects will not be felt rapidly, but when nothing is coming out, you know there will be a problem. Consumers must buy necessities, but they can still save some by not buying too much. If it's just for the day, then buy food that is only for the day. The problem with some people is that they are afraid that prices will rise the next day, so they stock food even though there's a possibility that it will be wasted when it goes bad. Imagine that: we are trying to save money, and yet we actually wasted some indirectly.
The consumers will still lose at the end of the day. Prices will go high because there's no consumption, and businesses will probably shut down due to zero sales.