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

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

#21

Post by ericmay »

pintxo wrote: post #19
Qasaur wrote: 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 a…

They don’t lend out their customer’s savings directly per-se but you have to have deposits in order to have assets to lend against. Otherwise, why wouldn’t you be able to create a bank out of thin air and loan money? Customers cost money, why even have them?

I think what you missed in the article you linked is the concept of reserve requirements. What the person you’re responding to said is actually correct, again otherwise why wouldn’t a small regional bank be able to lend the same amount of money as JPMorgan Chase? The more deposits you have, the more you can lend.

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

#22

Post by redis_mlc »

411111111111111 wrote: post #16
bobthepanda wrote: post #11

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).

Boeing was the USA's largest exporter, until they forgot that the aerospace business requires, you know, aerospace engineering.

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

#23

Post by cwhiz »

Bitch about people who didn’t save for an emergency expense or for retirement. Bitch about people who spend frivolously. And now, miraculously, bitch about people who are saving.

This is not a complex problem. If you want people to spend money you must give them a proper safety net. That means pensions and health care.

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

#24

Post by m463 »

cwhiz wrote: post #23

Bitch about people who didn’t save for an emergency expense or for retirement. Bitch about people who spend frivolously. And now, miraculously, bitch about people who are saving. This is not a complex problem. If you want people to spend money you must give them a proper safety net. That means pensions and health care.

From talking to others, a lot of people are saving money whether they want to or not.

People are eating at home, preparing their own food. Nobody is driving and spending money on gas and tires. No living large with nights out on the town or big travel plans.

I think lots of folks with their modest indoor activities or dog walking aren't spending just because, not because it is premeditated.

Though a lot of my friends who are thrifty are complaining about nothing being on sale anymore.

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

#25

Post by Fjolsvith »

digitaltrees wrote: post #5
Nasrudith wrote: post #3

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…

Good analysis. Relying on credit to enable consumer spending happened in the mid 1920s as stagnant wages, and income inequality reduced the discretionary budget of most consumers. At best spending on credit is a temporary boost to the economy as consumers will eventually be tapped out and spending will stop. I agree with you, consumer debt isn't the solution, more affluent consumers is the solution. Raise wages, sell…

This sounds exactly like what's happening in America today. Bring jobs back to the country, which elevates wages due to low unemployment, high worker demand. Bring manufacturing back to the country, which causes better products by them being designed closer to the people who would consume/use them.

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

#26

Post by 082349872349872 »

bobthepanda wrote: post #11
wwweston wrote: 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?

If you want germans and chinese to import your production, you'll need to raise standards to meet theirs. For pork, this has already started happening: Hormel, JBS, and Tyson are no longer taking ractopamine-dosed hogs, even though they're still legal to sell to US consumers.

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

#27

Post by Fjolsvith »

austincheney wrote: post #12
Nasrudith wrote: post #3

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 acce…

A very valid example of this from the front page of HN today:

https://news.ycombinator.com/item?id=23288318

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

#28

Post by RickJWagner »

m463 wrote: post #24
cwhiz wrote: post #23

Bitch about people who didn’t save for an emergency expense or for retirement. Bitch about people who spend frivolously. And now, miraculously, bitch about people who are saving. This is not a complex problem. If you want people to spend money you must give them a proper safety net. That means pensions and health care.

From talking to others, a lot of people are saving money whether they want to or not. People are eating at home, preparing their own food. Nobody is driving and spending money on gas and tires. No living large with nights out on the town or big travel plans. I think lots of folks with their modest indoor activities or dog walking aren't spending just because, not because it is premeditated. Though a lot of my friends…

Not where I live. I'm seeing take-out restaurants thrive.

My family usually eats out twice a week (plus a date lunch for wifey and I), but since corona we've upped it to 3 meals a week to help the restaurants. I think others might be doing similar things.

I think there'll be a shakeout. Restaurants that serve takeout well will survive and eventually thrive, those that rely on sit-in will suffer and maybe close.

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

#29

Post by 082349872349872 »

cmurf wrote: 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.

see https://en.wikipedia.org/wiki/The_Space_Merchants for a 1952 prediction of where "the consumption based economy" winds up. the original CNN article is not far removed from the initial attitude of the protagonist...

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

#30

Post by 082349872349872 »

ericmay wrote: post #21
pintxo wrote: post #19

Earlier quoted context omitted.

> 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 a…

They don’t lend out their customer’s savings directly per-se but you have to have deposits in order to have assets to lend against. Otherwise, why wouldn’t you be able to create a bank out of thin air and loan money? Customers cost money, why even have them? I think what you missed in the article you linked is the concept of reserve requirements. What the person you’re responding to said is actually correct, again ot…

looks like reserve requirements are currently 0% https://www.federalreserve.gov/monetarypolicy/reservereq.htm
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