PARADOX of THRIFT

I studied Econs in A level...and with my limited vacab at that time...this is one of the few economic theorms that I can actually understand.

PARADOX = 矛盾 ， THRIFT = 过份的节约

PM Lee also mentioned this threorm in his speech yesterday. In short, during bad timed where confidence in the economy is low and many expect income to be affected, job sbecomes insecured etcetc, it is rather normal that one would tends to be on the conservative side in spending. People save more, keep money in their banks and hide under pillow - "save it for a rainy day" so to speak. Make sense...for some who really have a true concern about their livelihood. It's a matter of survival to make ends meet in such trying times.

However, imagine if this is over done and everyone in the economy do the same instead, then no one go to movies, no one rent DVD, no one eat out, no one take taxi, no one hire maids etc etc. Then very soon, you will see the ripple effect of such severe thriftiness...company have no choice to retrench further due to low business, some even have to close shop, causing even more people to lose job. And there is less and less circualtion of monry in the economy cause every one hide them away under the pillow as soon as they receive the money.

The ultimate effect of such kiasuness....a REAL BIG RECESSION. So severe savings during a poor economy ...for those who can afford and not spend...actually doesn't help and make the economy even worse. This is call the PARADOX of thrift.

"If you have sufficient savings and can afford to spend, you should continue to spend on life's little pleasures. Take your family to the movies, shop, dine out at restaurants and hawker centres, go for your regular foot massage, indulge yourself at a spa, take a taxi, donate to charity and so on. This way, we keep the economy going. In fact, I would say when times are a little slow, you could get the best bargain,"

er- the last paragragh not I say 1...xiao lee say de. So go spend !! (if u can afford).