[ExI] A world drowning in excess savings

SR Ballard sen.otaku at gmail.com
Wed Feb 19 15:48:01 UTC 2020

I’m a little confused here.
>> > Who is doing this “excess saving”?
> Well, ordinary people among others... 19.1 Trillion dollars is in retirement and pension plans.

If someone doesn’t save for retirement, how are they doing to retire? If I woke up tomorrow and was magically 72 and unable/unwilling to work, I’d get social security, right? That’s gonna pay me all of what? 1200? 

For me now, that’d be fine. But as an older person I would have medical needs, and it would not be nearly enough money.

It’s like I tell my communist friends. “Sure, I understand your goals, but we live under Capitalism now, and you need to live your life in accordance with that.”

And last I remembered, most retirements are invested, aren’t they?

>> > Rich people?
> Yes, $ 35,000,000,000,000 in Hedge funds and other mutual funds.

So these savings are actually invested?
>> > Companies?
> Yes, in dividends and in 1.2 trillion dollars worth of stock buybacks in 2018 alone, the first full year after Trump's big corporate tax cut. Companies did NOT use the money from the tax cut to invest in their own company.
>  John K Clark

Aren’t dividends paid out? Don’t stock buybacks push up the price of a company’s stock making them seem more desirable? Isn’t a stock buyback spending money? Investors are selling, the company is buying.

I assumed we were talking about actual savings, like savings accounts and maybe CDs. Things with basically no ROI, or an ROI less than inflation. If people save money, they just means they spend it later. It’s just “deferred spending”. 

Retirement & pensions are spent when you get old. Cash savings like an emergency fund don’t grow forever — people create a buffer, they pay off their debts, then they buy stuff: housing, cars, boats, etc. 

The only reason that saving->spending is a problem is because our entire economy has based itself on loan->buy->repay. That was bound to correct eventually.

I’m also pretty sure people with millions in hedge funds actually do spend money— they buy computers, they buy suits, they get haircuts, all things I cannot afford to do. 

And companies pay their top execs the big bucks, which they seem to blow. That money goes somewhere.

SR Ballard
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