I think this discussion is turning to be interesting and actually focusing on what is important. I agree the decision for a nation to increase its savings or not is simply social or political. If a nation does have a high savings rate then certain benefits are shifted to future generations. If a a nation has a low savings rate then benefits are given to the present generation. But there is nothing in economic theory that says that one is more optimal than the other. And so the argument we give for increase savings is to think about our children, etc. And not saying this is bad or good. But it is a normative question, which we sometimes miss. And again, I simply cringe when I hear people talking about "Keynes's consumption theory" and using it for this and that. But unfortuntely for the last forty years ( and I would imagine that for most people on this list this is the time period you studied economics) textbooks and also government policies have focused on the consumption function as the heart of Keynes's economic theory. If you look at intermediate macro text and they talk about Keynes they first start with the consumption function and if you ask students what Keynes is all about they most likely will say something about mpc. And then you get to a chapter about investment which is usually pretty small compared to the chapter on consumption. And here you have something about interest rates and "animal spirits". And folks, for Keynes that's where is all at those funny "animial spirits" where entrepreneurs need to make investment decision in a world of uncertainty, etc. that Keynes found all the action. Yes, it's aggregate demand that's important but the consumption function plays a passive role while investment is dynamic. Another issue that Keynes gets dumped on is government spending, and part of the problem, again, is focusing on Keynesian economics as something to do with consumption to keep aggregate demand up. As Elba K. Brown-Collier and Bruce E. Collier have pointed out in their article "What Keynes really said about deficit spending" in JPKE, Vol. 17.: For Keynes, " Deficits in the current or ordinary budget were a sympton of insufficient private and public investment. They were not a cure for unemployment. Borrowing to finance public investment was justified on the grounds that the capital acquired provides a real return over time. Further, such borrowing was to be associated clearly with the cost of the particular services to be provided and amortized with scheduled payments from tax revenues."(p.354) And now let's look at what Keynes said: "The more socialised we become, the more important it is to associate as closely as possible the cost of particular services with the sources out of which they are provided even when a grant-in-aid is alo required from general taxes. This is the only way by which to preserve sound accounting, to measure efficiency, to maintain economy and to keep the public properly aware of what things cost." Keynes, Collected Works, vol. XXVII, pp. 224-225. -Ric Holt