[ExI] A world drowning in excess savings

John Clark johnkclark at gmail.com
Wed Feb 19 17:54:54 UTC 2020

On Wed, Feb 19, 2020 at 10:50 AM SR Ballard via extropy-chat <
extropy-chat at lists.extropy.org> wrote:

>> 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?*

They can't. I'm not saying they shouldn't save, I'm saying those who claim
people aren't saving are wrong. There are more people saving money than
borrowing money and that is the sign of a economy that is growing slower
than it could.

>> Yes, $ 35,000,000,000,000 in Hedge funds and other mutual funds.
> *> So these savings are actually invested?*

Yes and their investments are receiving historically low interest rates
because there is lots of investment money but few people who want to borrow
that money to actually build something.

> *If people save money, they just means they spend it later. It’s just
> “deferred spending”. *

A dollar spent today has a larger effect on the economy than a dollar spent

> >> 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.
> *>Aren’t dividends paid out?*

Yes, and the data indicates the stockholders take most of that money and
save it, they put it in a mutual fund and receive very low interest on it
because nobody wants to borrow it because the economy is growing so slowly.
And this isn't just a problem in the USA it's worldwide, incredibly in
Denmark, Sweden and Japan interest rates aren't just low they're actually
NEGATIVE, and that isn't healthy. Inflation is the last thing the world
should be worrying about!

> *> Don’t stock buybacks push up the price of a company’s stock making them
> seem more desirable?*

Yes and that's all they do. If INTEL uses its profits to build a new chip
fabrication plant it is using wealth to create more wealth, if instead it's
using its profits to buy back its own stock it's just using one type of
paper to buy another type of paper and a new wealth generating machine has
not been built.

*> 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. *

Sure rich people buy things, Jeff Bezos just bought a house for 160 million
dollars. That's sounds like a lot of money but the man is worth 160
BILLION, he could afford to pay cash for a thousand such houses, but of
course he's not going to do that, instead he's saving the rest.

John K Clark
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