Saturday, March 14, 2009

Save save save.

Peter Schiff does it again on
I know if we all start saving money things will get worse - but Schiff makes the important point that it is the leverage on capital that makes possible lending. So £1 saved is - say - £10 lent.
The present problem is that that £1 isn't there. Arguably, all the money thrown at the banks is to replace that £1, because the trillions they used to borrow on the interbank market has gone - and has had to be replaced by their own tier 1 capital and actual deposits. And, of course, all those taxpayer squillions.
So the answer? Save like hell and/or pay down debt as fast as possible.
The quicker you do it, the faster we will get back to a sort of normality.

No comments: