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Rich Retirees Are Hoarding Cash Out of Fear

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Re: Rich Retirees Are Hoarding Cash Out of Fear

#121

Post by incompatible »

oppositelock wrote: post #68
FabHK wrote: post #52

Earlier quoted context omitted.

The problem is that their individual virtuosity (or frugality) can hold back the economy as a whole (and poor people might suffer most from that). This is Keynes' Paradox of thrift. https://en.wikipedia.org/wiki/Paradox_of_thrift

Keyne's paradox of thrift is hogwash. If the occasional person is thrifty, there's no problem. If everyone is collectively "too thrifty", then we've got a problem, but this isn't the cause of the problem, it's a symptom. What does it mean when everyone is saving? It means that there is some kind of uncertainty or fear which is making people forego current consumption in favor of future consumption. This isn't a natur…

If people are thrifty, so need less money and work less, the economy will be smaller. That's a choice though, not a problem.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#122

Post by tunesmith »

charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

On the other hand, I've had a couple of experiences where I've grudgingly spent money on something, and then felt, "Oh my god, why didn't I do this sooner? It would have helped my quality of life." Not just as luxuries, but in ways that freed me up to feel more productive or healthy.

For instance (all of this assumes you have the money to do so), a bookkeeper for your small business. A CPA for your taxes. A lawn service. A financial planner. A bidet.

It makes me wonder what else like that is out there. Stuff that isn't purely materialistic, but is "worth it" for whatever value if "it" matches your net worth. For perpetual savers, being counseled on how they can spend their money (on worthwhile endeavors) might actually be useful.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#123

Post by oppositelock »

FabHK wrote: post #84
oppositelock wrote: post #68

Earlier quoted context omitted.

Keyne's paradox of thrift is hogwash. If the occasional person is thrifty, there's no problem. If everyone is collectively "too thrifty", then we've got a problem, but this isn't the cause of the problem, it's a symptom. What does it mean when everyone is saving? It means that there is some kind of uncertainty or fear which is making people forego current consumption in favor of future consumption. This isn't a natur…

What you say doesn't invalidate the paradox. In fact, that is precisely the paradox - that the individually responsible and rational thing (more saving in the face of uncertainty) actually accelerates the problem: an economy crashing down. Among the policy lessons would be to reduce uncertainty, and encourage consumption (in the economic sense), e.g. via government provided stabilisers (food stamps, unemployment bene…

Which eminent economists? You get two of them in a room and you get three different opinions.

Here's one economics PHd wielding economist refuting the paradox of thrift. http://www.econlib.org/library/Columns/y2009/Murphythrift.ht...

Here's an eminent one refuting it, in case the Nobel prize counts: https://mises.org/library/hayek-paradox-saving

Here's my issue with Keynesians and neo-Keynesians. They have zero concept of capital, it's all about cash flow - spending, saving, debt. They stimulate by printing, temper by taxing, etc.

They ignore the effects of such behavior on capital, and end up amplifying the cycles they try to prevent. This ties into monetary policy and deficit spending as well, but that's way too much of a tirade for Hacker News.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#124

Post by brianwawok »

reustle wrote: post #101
ransom1538 wrote: post #81

Earlier quoted context omitted.

Whatever you save with your blood, sweat and tears (if you are lucky) will be blown on medical expenses. The trick is to convert to cash (literal), then give it to your wife, convert medical expenses to debt and die.

The trick is to move to a country with proper healthcare

You get fine healthcare for free when you are old in the US. You just gotta be broke first. So it's a fine line to work....

Re: Rich Retirees Are Hoarding Cash Out of Fear

#125

Post by redahs »

FabHK wrote: post #84
oppositelock wrote: post #68

Earlier quoted context omitted.

Keyne's paradox of thrift is hogwash. If the occasional person is thrifty, there's no problem. If everyone is collectively "too thrifty", then we've got a problem, but this isn't the cause of the problem, it's a symptom. What does it mean when everyone is saving? It means that there is some kind of uncertainty or fear which is making people forego current consumption in favor of future consumption. This isn't a natur…

What you say doesn't invalidate the paradox. In fact, that is precisely the paradox - that the individually responsible and rational thing (more saving in the face of uncertainty) actually accelerates the problem: an economy crashing down. Among the policy lessons would be to reduce uncertainty, and encourage consumption (in the economic sense), e.g. via government provided stabilisers (food stamps, unemployment bene…

A liquidity glut is caused by savings exceeding desired investment. A shortage in desired investment is caused by an undersupply of investment opportunities. An increase in the supply of real investment opportunities can be incentivized by subsidizing public inducement prize competitions. The 'stabilizers' you propose subsidize the income of individuals but do not necessarily change individuals preference for savings vs consumption.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#126

Post by zeroer »

Erik816 wrote: post #90
bradleyjg wrote: post #42

Earlier quoted context omitted.

Consider, it's up to you but consider, that you might get more joy out of gifts while you are alive to watch the recipients benefit from them than you do out of imagining how much they'll benefit from bequests you intend to leave when you die.

A valid concern. But estate planning lawyers like to remind people that it's quite possible you will get more love and attention from your relatives in your old age while they are still expecting an inheritance than when they know you have already given it to them. A bit cynical, but relevant to consider.

I sincerely hope that when I'm that old, I'll be above such pettiness.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#127

Post by Mz »

Erik816 wrote: post #90
bradleyjg wrote: post #42

Earlier quoted context omitted.

Consider, it's up to you but consider, that you might get more joy out of gifts while you are alive to watch the recipients benefit from them than you do out of imagining how much they'll benefit from bequests you intend to leave when you die.

A valid concern. But estate planning lawyers like to remind people that it's quite possible you will get more love and attention from your relatives in your old age while they are still expecting an inheritance than when they know you have already given it to them. A bit cynical, but relevant to consider.

Sure, if the only good thing you ever give them is money, this may true. But if you are actually good to people, not so much.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#128

Post by incompatible »

anigbrowl wrote: post #65
charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

Economists distinguish between saving, consumption and investment. Excess saving is economically inefficient.

The amount of cash is determined by central banks. If one person decides to spend their hoard, somebody else will end up with it so the amount doesn't change. Money in bank accounts is lent to somebody else (with a multiplier).

Re: Rich Retirees Are Hoarding Cash Out of Fear

#129

Post by csomar »

ransom1538 wrote: post #81
dsmithatx wrote: post #61

My grandfather worked at Exxon Mobile for 60 years and retired around 1988 with a few million dollars in stock. I remember my dad saying he had about 3 Million in stock he purchased as his retirement plan. He built a house and bought a couple of nice cars living on about 100,000 a year. About 12 years ago he had a heart attack and stroke and was bed ridden. 12 years of doctor bills and hospice ate through almost ever…

Whatever you save with your blood, sweat and tears (if you are lucky) will be blown on medical expenses. The trick is to convert to cash (literal), then give it to your wife, convert medical expenses to debt and die.

If everyone does that, then it no longer works.

Re: Rich Retirees Are Hoarding Cash Out of Fear

#130

Post by charlieflowers »

tunesmith wrote: post #122
charlieflowers wrote: post #6

> "As a result, millions of Americans are living too frugally" WTF, really? Reminds me of Edward Bernays [1], the "father of public relations", who set out to help Americans become materialistic (and succeeded!). If someone is enjoying their life without blowing all their money, that person is BETTER off. It's just corporations that want to suck the money away from them that need to "train them to spend." [1] https:/…

On the other hand, I've had a couple of experiences where I've grudgingly spent money on something, and then felt, "Oh my god, why didn't I do this sooner? It would have helped my quality of life." Not just as luxuries, but in ways that freed me up to feel more productive or healthy. For instance (all of this assumes you have the money to do so), a bookkeeper for your small business. A CPA for your taxes. A lawn serv…

I agree, there's a balance. But I'd advise being skeptical when someone proposes, from a "policy level", that we need to train people to spend more. It's highly likely that -- like Edward -- they don't have your best interests at heart (but not guaranteed).
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