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Savings-based Economy

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beste
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Post: #1
Savings-based Economy

most of our modern economies are consumption based. and since consumption focuses on the here and now instead of tomorrow, most people really don't care if the world is polluted or clean or if we can even sustain our current levels of rapid devouring of natural resources.
because of that, i decided I would look into and build a nation that is savings driven, that focuses on sacrificing a little today so we can have more tomorrow. I would like people's inputs on both the pros and cons of a savings-based economy and how I can reach it through use of tasks, reforms, and budgets.


"I do not wish to think, or speak, or write, with moderation. . . . I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD." - William Lloyd Garrison, Abolitionist
18.01.2011 16:47
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Helsworth
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Post: #2
RE: Savings-based Economy

Keep the nominal interest rate close to 8-9%, don't mess with it once it's there and let the money supply alone. Go for a balanced budget while not sacrificing critical spending, such as PE education for example. Choose task options which benefit your domestic producers thus making you more competitive. Like freezing salaries, while the only real fiscal stimulus would be a reduction in capital tax. Keep inflation low and stable, stimulate people to put their savings into banks instead of hoarding them (the phishing task), cut customs only when your economy can really compete in a free-trade environment and wait for your economy to accumulate capital, when you've finished your savings cycle you can lower the interest rate and enter a spending cycle. Also a flat income tax would be more appropiate for your objectives.


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18.01.2011 17:00
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RichardAWilson
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Post: #3
RE: Savings-based Economy

You could choose to stimulate your economy (by reducing interest-rates, increasing the MS, reducing Acquisition and Capital-Taxes, etc.) while maintaining large public-sector surpluses. People often forget that the public-sector can save money. Every dollar you use to pay down your financial-indebtedness is a dollar that flows into your private-sector as savings. There’s something called the “Net-National Savings Rate” which combines the savings of the private and public sectors. By running large fiscal-surpluses, you’ll be offsetting public-consumption and private-consumption.

This post was last modified: 18.01.2011 19:38 by RichardAWilson.

18.01.2011 19:35
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Helsworth
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Post: #4
RE: Savings-based Economy

RichardAWilson Wrote:
You could choose to stimulate your economy (by reducing interest-rates, increasing the MS, reducing Acquisition and Capital-Taxes, etc.) while maintaining large public-sector surpluses. People often forget that the public-sector can save money. Every dollar you use to pay down your financial-indebtedness is a dollar that flows into your private-sector as savings. There’s something called the “Net-National Savings Rate” which combines the savings of the private and public sectors. By running large fiscal-surpluses, you’ll be offsetting public-consumption and private-consumption.

The role of governments is not to create large surpluses of money, or vice-versa. Not to mention the fact that in AR the people get angry when the state makes too much of a positive debt.


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This post was last modified: 18.01.2011 19:48 by Helsworth.

18.01.2011 19:47
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Jakerp
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Post: #5
RE: Savings-based Economy

Running surplus budgets is kind of saving based economy if you collect more taxes from people than use in budget you kind of force everybody to save money on goverment account.

19.01.2011 20:41
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RichardAWilson
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Post: #6
RE: Savings-based Economy

A number of countries do / have done this. Among them is the Netherlands (through oil-revenue, which is then invested by the National-Fund), Singapore (which used “forced-savings” to finance industrialization), and Chile (which maintains “forced-savings” via the national pension system). [Even America does this to a degree,] though the public-deficits are often larger than the public-savings. The 401(K), IRA, etc. are often compelling mechanisms to encourage savings. The Small Business Administration is, to a degree, a “forced-savings” program that saves and invests our taxpayer-dollars. Intra-governmental financing is the same as public-savings (redistributing FICA-surpluses into the General-Fund).

However, such things aren’t often done on a large-scale by running fiscal-surpluses because there’s too much of an incentive to reduce taxes / increase fiscal-expenditures. Not to mention voters don’t like being taxed more than needed. However, if I were establishing a “savings-based economy,” I would rather save through the public-sector while stimulating the economy than to encourage private-sector savings by doing those things which will damage the economy.
I might mention the “role of the State” is relative. Everybody’s perception on the “State’s-role” will, by nature, differ. John Maynard Keynes believed that governments should run surpluses during economic-expansions and deficits during economic-contractions. Some economists believe budgets should always be balanced. Some economists even believe in running small-deficits all of the time. Some favor running surpluses all of the time (crowding-in effect).
The Keynesian in me says run deficits if you’re facing liquidity-traps a.k.a. situations where savings aren’t being loaned and where lower interest-rates won’t matter. The “supply-sider” in me says run deficits if those deficits are “investments” (spending on education, infrastructure and labor-training), or where lower taxes will create a corresponding increase in private-sector savings to offset the public-sectors shortfall (Capital Gains Tax, Corporate Tax, Dividends, etc.) Otherwise, try to balance the books.

This post was last modified: 20.01.2011 07:53 by RichardAWilson.

20.01.2011 07:47
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beste
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Post: #7
RE: Savings-based Economy

Thanks for all the great advice.

In 1-2 days I will literally rule World Oxford (all 2 states). I am planning on experimenting with a world run that focuses on saving not consumption. I will put pretty much all of that above into tasks, budgets, reforms, etc..

One more question. What do apprentices stand for?


"I do not wish to think, or speak, or write, with moderation. . . . I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD." - William Lloyd Garrison, Abolitionist
21.01.2011 23:45
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Anthonie
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Post: #8
RE: Savings-based Economy

I think the saving based economy is best option in this high inflation period and saving will keep the inflation under control. The prices don't rise too high under saving based economy as the money value stays pretty stable over time and purchasing power of the public id not affected.

29.03.2011 05:50
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