Supply/Demand for Cash and Savings

An interesting way too look at it savings is with regards to supply/demand for cash and capital.

When there has recently been a lot of advancements in consumer technology, there would be an increase in demand for cash and spending, so savings will decrease. Companies have just finished a cycle of building to produce this new technology, so they have a lower demand for capital (savings).

When its been a while since new consumer advancements have been made - everyone has the latest/greatest, so no need to spend a lot. At this point, people will save their money to wait for the next round. Here, companies profits will start to diminish and they will be in search of the next great invention, they will demand capital which comes from savings.

These cycles would seem to balance themselves. It would only be when one cycle speeds up while the other does not that problems would occur. One example we are seeing now is a result of too much debt. This debt has allowed consumers to acquire the latest/greatest technology at a much quicker rate, but there has not been an acceleration of innovation. As a result, the typical period where people would be saving and fueling investment is now a period where people are repaying debt.