The failure of households to build up savings during the economic downturn is hampering prospects fo...
The failure of households to build up savings during the economic downturn is hampering prospects for recovery, according to brokers Smithers & Co. Chairman Andrew Smithers said recessions since WWII have typically been caused by central banks raising interest rates in response to inflationary pressures. Households generally respond by increasing their savings and the resultant decline in consumption then led to falls in investment. Once the threat of inflation receded, central banks cut interest rates and the the economy recovered as savings fell. But Smithers said the recent downtu...
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