Forced saving

In economics, forced saving occurs when the spending of a person is less than their earnings, due to the consumer goods shortages which can cause hyperinflation. Forced saving can also happen when available goods are too expensive, therefore a person who has no access to credit has to accumulate the money for their purchase over an extended period of time. Forced saving holds a major role in describing how expansionary monetary policy in turn can cause artificial booms. Unlike saving money, forced saving is involuntarily decreasing present consumption, whilst saving money is voluntarily lowering present consumption for an increase of consumption in the future. Examples Example of the first mentioned situation could be forced savings of households caused by massive consumer goods shortages in Russia during 1991. Net forced saving ratio of households during year 1988 was estimated around more than 40%.