Only an increase in national saving or an increase in the efficiency with which we use our saving can help us meet the retirement requirements of the coming years. Indeed, improved productivity of capital probably explains much of why the American economy has done so well in recent years despite our comparatively low
national saving rate. For productivity and standards of living to grow, financial capital raised in markets or generated from internal cash flow from existing plant and equipment must be continuously directed by firms to its most profitable uses--namely new physical capital facilities perceived as the most efficient in serving consumers' multiple preferences. It is this continuous
churning, this so-called creative destruction, that has become so essential to the effective deployment of advanced technologies by this country over recent decades.
Full Testimony: http://www.bog.frb.fed.us/boarddocs/testimony/current/19990303.htm