@Iwonder,
The excess of saving over investment represents a shortfall in demand, and weak demand shows up in anaemic growth figures and low inflation. Normally a central bank would try to fix the imbalance between saving and investment by reducing interest rates (which should discourage saving and encourage borrowing).
Every period, let's say every year, the owners of capital, labour and land apply those factors of production to the production of goods and services in exchange for income in the form of profits, interest, wages and rent. Subsequently, part of this income is spent and the remaining part saved. The part that is saved is then used to finance investment either directly (companies using their profits to expand their businesses) or indirectly by lending ones savings to those that want to invest in exchange for interest.
The crucial point here is that the people that save and the people that invest are not quite often the same. If the future looks bleak savers may want to save more than what investors are planing to invest leading to an excess of planned savings over investment, in which case interest rates have to fall to the point where planed savings become equal to planned investment. If the returns on investment are not good and interest rates can no longer fall then the only way for planned savings to become equal to planned investment is by making people,poorer, that is, by letting GDP to fall, which becomes quite noticeable when one sees a lot of for sale and closing down sale signs appearing. In order to avoid this governments have to be the ones to spend in order to move GDP up.
