China Is a Nation of Savers. Many Are Drowning in Debt.

THE NEW YORK TIMES: As Beijing pushes consumer lending to stimulate the economy, millions of Chinese borrowers, especially the young, are falling into debt spirals.

China is a nation of savers. The Chinese government wants its people to spend more and save less. It also wants them to take on more debt, all for the sake of saving the economy from a four-year slump.

The national financial regulator urged banks in March to expand consumer lending and offer more flexible repayment terms. Last month, policymakers promised to provide “innovative” financial services to boost consumption.

Yet many Chinese consumers are wary. An alarming number of them are already defaulting on their debt.

From 2021 to 2024, China’s total household savings grew 50 percent, as people scared off by a big decline in housing values stuffed their money in banks. During the same period, the number of loans that households could not afford to pay back nearly doubled.

For Beijing, expanding access to credit may seem like a quick way to stimulate the economy. But this push for consumers to borrow risks deepening a growing personal debt crisis. Many borrowers, particularly young people, are caught in cycles of debt, driven by poor financial literacy, high youth unemployment and stagnant wages. » | Li Yuan | Wednesday, August 6, 2025

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Savers 'Condemned to £33bn Loss' by Bank of England

THE DAILY TELEGRAPH: The potential effect of new policies on inflation and interest rates has been calculated, showing enormous strain being heaped on savers.

Savers stand to lose as much as £33bn over the next three years due to new policies on interest rates and inflation, calculations for The Telegraph show.

The Bank of England has condemned savers to this fate by allowing inflation to soar above interest rates until at least 2016, campaigners said.

When inflation is higher than the return on savings, money held on deposit effectively loses its value – in other words, the cash grows more slowly than the cost of living. This is happening today because the average savings account pays 1.66pc, while inflation is 2.8pc.

The Bank of England is supposed to use higher interest rates to keep inflation under control at 2pc. But in a radical policy shift, it said policymakers will not worry about high inflation unless the expectations rise above 2.5pc.

The new head of the Bank, Governor Mark Carney, has indicated Bank Rate will only rise from its record low 0.5pc when unemployment – a gauge of Britain’s economic health – falls from 7.8pc today to below 7pc. The Bank’s economists do not expect this to happen until 2016. » | Dan Hyde | Tuesday, August 20, 2013

My comment:

Mark Carney's policies are irresponsible. Indeed Mark Carney is irresponsible; and the man's abilities are very much over-rated. The Bank of England and the government owe savers and pensioners a duty of care; instead, however, they are throwing them to the lions! – © Mark

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Did QE Punish Savers for Nothing?

THE DAILY TELEGRAPH: Comment: A US study suggests "QE2" boosted economic output by just 0.04pc. Did pensioners and savers suffer for such little gain?

Impoverishing savers has been a price worth paying for rescuing the economy – so runs the official justification for the Bank of England's money-printing programme.

But it turns out that the benefits of printing all that new money may have been negligible. According to a new study by two senior US economists, America's second programme of quantitative easing, nicknamed "QE2", boosted economic output by just 0.04pc.

Simply telling the markets that interest rates would remain low was more effective, adding 0.09pc to growth, said Vasco Curdia, senior economist at the San Francisco Federal Reserve, and Andrea Ferrero, his opposite number at the New York Fed. Read on and comment » | Richard Evans | Tuesday, August 13, 2013

Betraying Savers and Law-abiding Citizens Is Neither Modern Nor Compassionate
TELEGRAPH – BLOGS – NORMAN TEBBIT: Extract: … There is not much doubt that QE will help the economy to grow, but it will be at the expense of a further rise in inflation. That will cut the value of wages, but also reduce the value of savings and the burden of debts. Borrowers will be winners, and savers will be the mugs again. I am not sure that is either compassionate, or very modern. It is a cruel deception that has been played at the expense of the vulnerable too often in the past. – Norman Tebbit … Read the complete blog here » | Norman Tebbit | Friday, October 07, 2011

My comment:

Excellent blog, Mr. Tebbit. As a lifelong Conservative voter, I feel alienated by Mr. Cameron's version of Conservatism. I feel particularly alienated by his government's lack of concern for savers. I also feel very concerned about the Bank of England's propensity to print money whenever there's a problem. Turning on the printing press is no sound solution to anything. Haven't any of these people ever studied any economic history? Have they not heard of the disaster of hyperinflation in the Weimar Republic, caused in no small part by turning on the printing press?

I wish someone could tell me why this country has for many years paid such scant regard to saving and savers. It seems to me that in any sound, well-run economy, it is a great advantage to have a well-to-do, cushioned populace. For some inexplicable reason, successive governments in this country seem not to have thought so. The current government is no exception.

I thought that having a Conservative government again (albeit tempered by the LibDems) would usher in a period of economic sanity after the foolhardy years of Labour control, or lack of it. I have been sorely disappointed. – © Mark

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Under Their Watch: Bush, Blair, Brown & Co. They're All the Same
THE TELEGRAPH: Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history.

Experts have warned the return on savings could plumb new depths with the Bank expected to take unprecedented steps to regain control over the economy.

They widely believe the Bank will reduce borrowing costs to below their 2 per cent level - and possibly all the way down to 1 per cent - in its first meeting of the year next week.

More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record.

Many elderly people who rely on the income from savings have found themselves struggling in recent months as returns fall. Savers Facing Accounts with No Interest >>> By Edmund Conway and Myra Butterworth | Saturday, January 2, 2009

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