Try this on for size: if you simply "promote savings", then what happens to the interest rate? (30 seconds, time is up) Um uh gee -- It FALLS. now, that is supposed to "encourage" investment. BUT at best what it does is encouraging borrowing. Borrowing for WHAT? Hey, the choice of the borrower, right? OKAY. In a healthy functioning economy, what happens is that innovators see opportunities that others don't. They anticipate high returns on those opportunities (until everyone else catches on). THAT MEANS they are willing to pay a higher-than-average return on borrowed funds. The higher-than-average returns attracts the would-be investor. The investor is not a person but an institution engaged in financial intermediation. That institution is willing to pay, in turn, higher rates of return on funds from constituents. The higher rates of return translate into higher interest rates which then should have an impact on the idnividual back there thinking about "Hmmmm, save or consume, save or consume, what to do?" (Note the word "should" -- there are lots of glitches that can boggle up this whole process, yes?) SO. An obsession with promoting saving as a more "pure" form of economic activity than consumption can backfire on you. Because it isnot saving that you really want to be promoting. It is innovation. And placing too much emphasis on saving (taking funds away that might have been used to purchase that new innovation ...) is no more or less an imbalance than any other sorts of interventions in the process. But it plays well in Washington. -- Mary Schweitzer