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Thursday, August 19, 2010

Savings accounts will become "obsolete"

Interesting article in the London Telegraph. It is really common sense. When inflation rates become high enough that people LOSE purchasing power by saving money, the incentive to save disappears.

This is why, in an inflationary environment, goods fly off the shelves and people do not save. They must spend the money on "things" rather than simply watch the purchasing power of their money go to zero. Prices respond by going up, as more and more "dollars" (or pounds, or euros, or francs, or whatever) are chasing the goods. It is a vicious cycle and very difficult to stop once it gets going.

Savings accounts will become "obsolete" - Telegraph

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