Live data from Hacker News

New threat to the economy: Americans are saving like it's the 1980s

edition.cnn.com

11–20 of 56 posts

Re: New threat to the economy: Americans are saving like it's the 1980s

#11
post #4
post #2

Profligate spending has been good for the consumption based economy, and bad for the vast majority of Americans who lack rainy day savings. Let alone something more serious. If self-reliance and personal fiscal responsibility is a "threat to the economy" then the economy is part of the problem.

We've gotten efficient enough of producing the basics that we don't need everyone or maybe even half of the available labor market to do it. That means either a good chunk of people have to be employed doing stuff driven by unnecessary spending, or they don't have employment. And we aren't great at distributing necessities to those who don't have employment. You could say the economy is part of the problem. Or you co…

Demand doesn't necessarily have to be US demand, though.

For the past few decades US consumer demand has done a lot of heavy lifting for the global economy. Why can't more of this come from other big markets like Germany or China?

Re: New threat to the economy: Americans are saving like it's the 1980s

#12

Even with the macroeconomic effects as valid the mode of thinking is so painfully backwards and entitled in so many ways. 1. The job of the producers is to produce what the consumers want, not the consumers to accept whatever they want to produce! It is not a birthright to guaranteed profit from whatever they want to produce being sold. That has never existed. It brings to mind every idiot CEo of a business which fai…

> The job of the producers is to produce what the consumers want, not the consumers to accept whatever they want to produce!

But that is the current general practice of software, especially online interconnected software, to force acceptable product preferences to the consumer without regard for consumer demand or competition. Developers typically dictate the choice of architecture and framework and then specify acceptable ranges of performance and design allowed by that framework utterly without regard for what the user wants or willing to pay for. That is developers putting their personal technology preferences before the user concerns or business revenue goals. When you point out the nature of ethics violation the developers most concerned by those technology preferences get really emotional, perhaps hostile. I have seen this at every software job I have held and it’s not limited to any language or class of technologies.

Re: New threat to the economy: Americans are saving like it's the 1980s

#13
It's only a problem if you subscribe to (in my opinion, the flawed and incredibly destructive) modern economic theory which is largely a continuation of the Keynesianism of the mid-20th century. Ask any economist why deflation is a bad thing and they will generally tell you that it is because they want to avoid a deflationary spiral with collapsing prices and high unemployment, which is why they want to ensure that consumers mindlessly consume and ensure that prices are kept "stable" (in their opinion, stable prices mean a positive inflation rate of 2%, which in my humble opinion does not make sense in pure mathematical terms).

However, there are two fundamental and overlooked errors in the assumptions that underlie this theory:

a) there is an assumption that consumers/agents are homogenous in their preferences and that people would rather starve to death than give up the opportunity to spend their money when it is worth more in the future. No sane person is going to wait one year to wait out some insignificant appreciation in the value of the money. People will still need to consume food and many of them would prefer to buy things now than in the future (consumer time preference, i.e. the desire to want things now rather than later, is always positive). For some inexplicable reason, time preference is completely ignored in the foundations of the theories that underpin modern monetary policy.

b) the second main assumption is that money saved is money that is unproductive. This is false: savings lead to investment in the economy as resources that would otherwise be consumed are redirected into lengthening production structures in the economy. Put simply, this means that if more people put money in the bank, the bank will have more money to lend out and interest rates would fall, allowing entrepreneurs and companies to invest in production structures which in the long-run will lead to higher quality goods and cheaper prices.

Of course, in the current highly distorted economy, deflation is disastrous as companies which are addicted to debt will need to be liquidated as there is no longer a steady stream of money coming in through inflation. This will likely lead to a severe recession, but this is not a bad thing as in the long-run the economy is better off as inefficient businesses who are addicted to debt and cheap money will no longer be able to operate, and clever entrepreneurs will be able to take their place.

It is savings that build up capital structures in the economy, not consumption which largely distorts and even destroys said structures, and the faster we stop this destructive inflationary monetary policy the faster we return to sustainable, fair, and real economic growth.

Re: New threat to the economy: Americans are saving like it's the 1980s

#14
People should save even in a healthy economy. You should always have emergency fund + additional saving to reach your goals.

Investors do save as well. Much more than average consumers. The difference is that average consumer doesn’t have enough to buy assets or diversify their saving as much as investors can do.

Re: New threat to the economy: Americans are saving like it's the 1980s

#15
post #6

As bad as it is, I feel like this is our chance to do some large scale norm changes. Eg. Shorter standard work week, more time off. No as some liberal/socialist agenda but as a way to reach full employment again. I don’t think we’re ready for basic income, but whatever the right stepping stone is, I think govt has a big enough reason to address it now. Edit: our/we = US, habit and context of article

Another thing is to stop tying healthcare to employment via tax benefits for employers. So many people are stuck in less than ideal jobs because the employer-provided healthcare system is nuts. On top of that many of these plans aren't even that great any more.

It seems that giving free healthcare, a free place to live, enough food and internet to everyone would be a good idea to stimulate the economy. Jobs would be generated by themselves if people then want a higher standard of living but no longer have to fight to survive.

Re: New threat to the economy: Americans are saving like it's the 1980s

#16
post #4

Earlier quoted context omitted.

We've gotten efficient enough of producing the basics that we don't need everyone or maybe even half of the available labor market to do it. That means either a good chunk of people have to be employed doing stuff driven by unnecessary spending, or they don't have employment. And we aren't great at distributing necessities to those who don't have employment. You could say the economy is part of the problem. Or you co…

Demand doesn't necessarily have to be US demand, though. For the past few decades US consumer demand has done a lot of heavy lifting for the global economy. Why can't more of this come from other big markets like Germany or China?

The only product the USA produces inside its borders that's actually in demand globally is culture (movies, tv shows etc).

Re: New threat to the economy: Americans are saving like it's the 1980s

#17

Earlier quoted context omitted.

Demand doesn't necessarily have to be US demand, though. For the past few decades US consumer demand has done a lot of heavy lifting for the global economy. Why can't more of this come from other big markets like Germany or China?

The only product the USA produces inside its borders that's actually in demand globally is culture (movies, tv shows etc).

and software (Google, Microsoft, Facebook, etc).

Re: New threat to the economy: Americans are saving like it's the 1980s

#18

Earlier quoted context omitted.

The only product the USA produces inside its borders that's actually in demand globally is culture (movies, tv shows etc).

and software (Google, Microsoft, Facebook, etc).

I'd consider them multinational at best. They'll stop targeting USA first as soon as it's more profitable to do so.

They did start there though, that's for sure!

Re: New threat to the economy: Americans are saving like it's the 1980s

#19
post #13

It's only a problem if you subscribe to (in my opinion, the flawed and incredibly destructive) modern economic theory which is largely a continuation of the Keynesianism of the mid-20th century. Ask any economist why deflation is a bad thing and they will generally tell you that it is because they want to avoid a deflationary spiral with collapsing prices and high unemployment, which is why they want to ensure that c…

> b) ... this means that if more people put money in the bank, the bank will have more money to lend out and interest rates would fall

This is not how lending works for banks in the western world. Banks do not lend out their customers savings.

Basically banks are legally allowed to create money out of thin air. They are only limited by their equity in how much money they can create as they have to reserve a certain amount of equity for each unit of created money.

https://en.wikipedia.org/wiki/Money_creation#Role_of_banks_i...

Re: New threat to the economy: Americans are saving like it's the 1980s

#20
post #6

As bad as it is, I feel like this is our chance to do some large scale norm changes. Eg. Shorter standard work week, more time off. No as some liberal/socialist agenda but as a way to reach full employment again. I don’t think we’re ready for basic income, but whatever the right stepping stone is, I think govt has a big enough reason to address it now. Edit: our/we = US, habit and context of article

> No as some liberal/socialist agenda but as a way to reach full employment again.

You know that this is bascially the same reason socialists are in favor of shorter working weeks, right? Their "socialist agenda" is virtually the same as your reasoning.

Post reply on HN