class="MsoNormalThe government should come up with a proper policy, like forced saving
for the working class earlier in life, as happens in Singapore, in order for them to have decent homes in future other than introducing some ad hoc taxation that will end up hurting the common mwananchi.
This phenomenon is known as "forced saving," because the redirection of resources from consumer goods' production to capital goods' production caused by bank credit expansion does not comport with the voluntary saving preferences of households.
This brings us to the role of forced saving as the source and impetus to overinvestment.
Second, and more important, is the point that even when circumstances prevailing at the beginning of an inflation foster forced saving to such an extent that resources are released from consumer goods' and other lower stage industries, the situation will inevitably be reversed as the boom progresses.
I guess I'd be OK with that; it's kind of like forced saving
. It would help you have a certain peace of mind, I guess, which is important when you get up in years.
Pay yourself first is a forced saving technique that simply means you consistently set aside a certain amount from your salary each month before you take care of your living expenses or make discretionary purchases.
There are many ways to incorporate forced savings. One example is to put your money into an account that you can't access easily.
While this sort of "forced saving
" may seem like a good idea, that is money you could have made better use of throughout the year, such as saving in an interest-bearing account.
As an example, Hayek's evolving views on the effects of forced saving and the trade-off between progress and cyclical stability are examined more closely.
3 A Substantive Issue: Hayek's Early View of Forced Saving
As a first step of this investigation we must clarify the meaning and importance of forced saving. (13) In Austrian business cycle theory (and in many related approaches) a state of monetary equilibrium (or neutral money) is a precondition for the absence of business cycles.
Higher inflation and interest rates impose a form of forced saving