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Future Prosperity Panel
Director - Advocacy International
Fellow - New Economics Foundation
Ann Pettifor is a fellow of the New Economics Foundation (nef) in London where she dedicated three years to studying the post-Bretton Woods financial architecture. This led to the publication of the Real World Economic Outlook. She also co-authored The Green New Deal, updated under the title The Cuts Won't Work in December, 2009. Her most recent publication The Economic Consequences of Mr Osborne was co-authored with Professor Victoria Chick.
Summary of essay
A great many of us believe that savings are a "good thing" - from both a moral and an economic point of view. But the transformation of our financial system means that modern economies rely much less on savings than this would suggest. In a monetary economy, savings are not a prior necessity for investment. Since society can draw on a great advance and public good – the banking system – for the creation of credit.
In order to sustain prosperity, our banking system must be wisely regulated. Bankers cannot be allowed to create credit recklessly, and capital flows must be restrained. This system will then be of enormous benefit to entrepreneurs, to innovators and to industry at large, as it will incentivise investment.
In conditions of prosperity, individuals will feel more confident in their future prospects and will be less likely to save excessively. Those savings they do have should be put into economically productive investments with high rates of return.