IS/LM Model

And finance Allah shmoop What Our national savings The term

national savings refers to the total of all private and

public savings in a country All the money socked away

for you know that rainy day you get your monthly

paycheck you pay your rent you buy food and shell

up cash for your utilities your Internet service your phone

a few trips to the go kart track and maybe

buy your mom flowers for her birthday Well at the

end of the month you have twelve dollars seventeen cents

a left That goes into your savings account the same

starter savings account you first opened when you were twelve

Well that twelve dollars seventeen cents also gets counted in

the national savings total Well your twelve dollars seventeen cents

gets added to the one hundred million dollars or so

that a hedge fund manager made and paid himself for

basically pushing people's money around and taking a big fat

fee for it So he keeps that money That's his

savings And then you have all the other money saved

by people in companies and governments in the country They

all get added up All of that dough is totaled

two comprise the national savings well in practice The national

savings figure isn't calculated by adding everyone's bank accounts Jeff

Bezos Finances are much more complicated than those in York

you know junior savings account which still entitles you to

a lollypop with every deposit It might be hard to

get a firm grasp on just how much money Bezos

has saved a pay for the eventual vacation community on

the moon he plans to build with Ellen Moscow actually

may be the new one is going to be built

on Mars What do you think Well getting those savings

numbers may be difficult to get Teo because well for

Bezos and Musk most of their wealth is in stock

It hasn't been converted to cash savings so it just

sits there and it goes up with the market or

a little better than the market these days anyway Meanwhile

other people are burying cash in Mason jars in the

backyard In case you know the zombie apocalypse comes back

and all the bank's just go away or shut down

we're getting a good estimate on these totals in total

savings numbers is difficult So instead of adding up all

the savings account totals National savings is calculated a different

way Instead the figure is computed by taking the amount

of money people earn in a period when just subtracting

the amount they spend Yes very clever Well people either

spend or save their money That's the assumption here What

they didn't spend well they must have saved right Well

in terms of an equation national savings equals disposable personal

income minus personal consumption expenditures That's the big equation Well

disposable personal income represents the amount left over in people's

paychecks after they pay their taxes The amount they have

available to spend or save is you know what's left

well Meanwhile personal consumption expenditures represent the spending total The

difference between the two Well that's what's been saved when

comparing country's national savings is given as a rate like

big countries will always have a big total for savings

but it doesn't mean that they're good at saving So

to compare you need to compute a rate of savings

So for that computation to take place you take the

amount saved and calculate the ratio of that number with

the country's GDP That figure then gives you the national

savings rate Some countries save a lot Others say very

little So you know on one end of the spectrum

you've got the Singapore here It had a national savings

rate of Yes forty six point five percent of GDP

in two thousand seventeen Close toe Half of the money

earned in the country went to savings on the other

end You've got grease Hello Bankrupt Greece Yes we feel

your shame Savings rate of only ten point nine percent

in two thousand seventeen Little over ten percent of the

money earned their got saved Meaning Just under ninety percent

of it got spent as soon as it arrived Well

the U S is a lot closer to Greece Sadly

on the list it's gross National savings rate told seventeen

and a half percent in two thousand seventeen And before

you start yelling at your family at the next Thanksgiving

about how they need to save more the low savings

rate is largely the government's fault Yes White House We're

looking at you National savings includes government figures Well part

of the issue for the U S is that the

federal government runs a heavy deficit mat number that spend

leaps into the overall savings rate for the country for

the federal government ran a deficit of six hundred sixty

five billion dollars in two thousand seventeen cost us a

fortune and it had taken off a lot of our

twelve dollars seventeen cent deposits into our junior savings account

Tio you know cancel all that huge government debt out

So what We just eat it That's it National savings