[ExI] A world drowning in excess savings

Keith Veronese veronesepk at gmail.com
Wed Feb 19 01:06:52 UTC 2020

I won't rest until Dave Ramsey is in jail for this.

On Tue, Feb 18, 2020 at 7:05 PM William Flynn Wallace via extropy-chat <
extropy-chat at lists.extropy.org> wrote:

> 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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