[ExI] A world drowning in excess savings

William Flynn Wallace foozler83 at gmail.com
Wed Feb 19 01:04:56 UTC 2020

And the average credit card debt is around $7000.  Oversaving?  bill w

On Tue, Feb 18, 2020 at 5:41 PM SR Ballard via extropy-chat <
extropy-chat at lists.extropy.org> wrote:

> The economy is horrible all around the world because we are saving too
> much, yet, the average American has less than $400 in savings, and a large
> number are at risk of becoming homeless if they had an expense greater than
> $1000. Odd.
> Who is doing this “excess saving”? Rich people? Companies? Governments
> clearly aren’t, because, you know, deficits.
> SR Ballard
> 2020/02/18 17:27、John Clark via extropy-chat <
> extropy-chat at lists.extropy.org>のメール:
> This is a interesting column by Nobel Prize winning economist Paul Krugman:
> The latest numbers from Japan are in, and they’re terrible
> <https://nl.nytimes.com/f/a/wYgdD2PUMsxBtVmzEysORg~~/AAAAAQA~/RgRgLqRLP0T1aHR0cHM6Ly93d3cubnl0aW1lcy5jb20vcmV1dGVycy8yMDIwLzAyLzE2L3dvcmxkL2FzaWEvMTZyZXV0ZXJzLWphcGFuLWVjb25vbXktZ2RwLmh0bWw_dGU9MSZubD1wYXVsLWtydWdtYW4mZW1jPWVkaXRfcGtfMjAyMDAyMTgmY2FtcGFpZ25faWQ9MTE2Jmluc3RhbmNlX2lkPTE2MDc3JnNlZ21lbnRfaWQ9MjEzODEmdXNlcl9pZD0yNGZkOGU4NTE5YWM1YmFjYmFmZGEzNjY5MWU1ZDdhYyZyZWdpX2lkPTY3OTAzMTQ5MjAyMDAyMThXA255dEIKACFLH0xejjM6JFIUam9obmtjbGFya0BnbWFpbC5jb21YBAAAAAA~>
> : In the fourth quarter of last year Japan’s economy shrank at an annual
> rate of 6 percent. And no, it wasn’t the coronavirus: we won’t see the
> negative effects of that shock until the next set of numbers.
> But there’s nothing mysterious about Japan’s stumble. It was the result of
> an extremely ill-advised turn toward fiscal austerity, in this case taking
> the form of a hike in the value-added tax.
> The thing is, nobody should have been surprised at this outcome. Over the
> past decade we’ve seen many, many experiments in fiscal austerity — raising
> taxes or cutting spending. And without exception the impact of fiscal
> tightening has been to shrink the economy. We’ve also seen a few
> experiments in deficit spending, most notably the explosion of the U.S.
> deficit under Donald Trump, and bigger deficits have consistently given the
> economy a boost.
> So was fiscal responsibility always a terrible idea? No. It was never a
> great idea — claims that deficit reduction would produce a surge in private
> investment, which I once mocked as belief in the “confidence fairy
> <https://nl.nytimes.com/f/newsletter/ftrNxB8mhPPuFUPSkFM7fA~~/AAAAAQA~/RgRgLqRLP0TYaHR0cHM6Ly93d3cubnl0aW1lcy5jb20vMjAxMC8wNy8wMi9vcGluaW9uLzAya3J1Z21hbi5odG1sP3RlPTEmbmw9cGF1bC1rcnVnbWFuJmVtYz1lZGl0X3BrXzIwMjAwMjE4JmNhbXBhaWduX2lkPTExNiZpbnN0YW5jZV9pZD0xNjA3NyZzZWdtZW50X2lkPTIxMzgxJnVzZXJfaWQ9MjRmZDhlODUxOWFjNWJhY2JhZmRhMzY2OTFlNWQ3YWMmcmVnaV9pZD02NzkwMzE0OTIwMjAwMjE4VwNueXRCCgAhSx9MXo4zOiRSFGpvaG5rY2xhcmtAZ21haWwuY29tWAQAAAAA>,”
> were never supported by the evidence. But the world has changed in ways
> that make austerity policies more destructive than they used to be.
> You see, in the past it was relatively easy to offset the negative effects
> of austerity with other policies: as nations tried to balance their
> budgets, their central banks — the Federal Reserve and its sister
> institutions — could help sustain the economy by cutting interest rates.
> Today, however, interest rates are very low
> <https://nl.nytimes.com/f/a/4X_9ycAWUcV1W2vepJNdyg~~/AAAAAQA~/RgRgLqRLP0TeaHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9tYXJrZXRzL3JhdGVzLWJvbmRzP3NyZWY9cXp1c2E4YkMmdGU9MSZubD1wYXVsLWtydWdtYW4mZW1jPWVkaXRfcGtfMjAyMDAyMTgmY2FtcGFpZ25faWQ9MTE2Jmluc3RhbmNlX2lkPTE2MDc3JnNlZ21lbnRfaWQ9MjEzODEmdXNlcl9pZD0yNGZkOGU4NTE5YWM1YmFjYmFmZGEzNjY5MWU1ZDdhYyZyZWdpX2lkPTY3OTAzMTQ5X3BrXzIwMjAwMjE4VwNueXRCCgAhSx9MXo4zOiRSFGpvaG5rY2xhcmtAZ21haWwuY29tWAQAAAAA> even
> when economies are strong — around 1.5 percentage points in the U.S.,
> actually negative in much of Europe and Japan. So there’s little or no room
> to cut to offset the depressing effects of austerity.
> But why are interest rates so low? The answer basically comes down to a
> global excess supply of saving: around the world, people want to save more
> than businesses are willing to invest in new factories, office parks, and
> so on. This leaves the world awash in savings that are all dressed up with
> nowhere to go, which is in turn a world in which bond markets are
> effectively begging governments to borrow and spend.
> And governments should take them up on the offer. The sensible, prudent
> thing to be doing now would be to borrow at these low, low rates and use
> the money for public investment: rebuilding our creaking infrastructure,
> subsidizing new technologies (especially green energy), and making sure
> that children have adequate health care and nutrition.
> Of course, we’re not doing that in America: the Trump administration is
> borrowing vast sums, but squandering the money on tax cuts for corporations
> and the wealthy. Yet even that is preferable to the behavior of governments
> that are still hung up on the notion that prudence means balancing the
> budget — and as we’ve just seen in Japan, seem unwilling to learn from the
> repeated disasters of austerity.
> Now is the time to borrow and invest. But is anyone willing to do the
> obviously right thing?
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