Monday, December 14, 2009

Why Save?

"In the recent unpleasantness, the [US] made some progress towards solving its biggest economic problem of recent years: the lack of US savings. Regrettably, in the latest figures, the beginnings of economic recovery have brought backsliding with the savings rate dropping back from 6% to 4.3%. Without more savings, as global liquidity declines, the [US] will quickly become a capital-starved economy, losing investment to capital surplus countries where savings are plentiful. The difficult questions are: what caused the savings decline and what can be done about it? ... The US savings rate began to decline in the 1970s. ... There appear at first glance to be three factors that may have affected the trend in savings rates: The first and most important is the return available to savings. ... The second reason why the savings rate may have declined is the revolution in consumer finance since the 1960s. ... The third reason, impossible to quantify, is the attitude to saving of the US population itself", Martin Hutchinson at Prudent Bear, 26 October 2009, link:

The savings rate fell because interest rates are too low. As long as Zimbabwe Ben can steal your savings to give banks to prop them up, why save? Further, your savings are subject to taxes on non-existent interest and capital gains. Among other things the tax code should change to encourage savings. What's hard to understand? Under the current fiat-money, post-1971 regime, interest is what Uncle Sam promises to pay you to steal your principal.


American Delight said...

Ah, but they don't want us to save right now. They want us to spend, spend, SPEND! Larry Summers still believes in the fantasy where an economy can keep humming along indefinitely so long as the middle class goes on shopping sprees again.

W.C. Varones said...

This is sort of two sides of the same coin, but it's not just interest on savings that matters.

It's also the easy credit encouraging excess consumption, which reduces savings by burying people in debt service.

Anonymous said...

Industry (1-39) – Energetic devotion to a task or an endeavor; diligence.

Early to bed, and early to rise, makes a man healthy, wealthy and wise
Diligence is the mother of good luck
God helps them that help themselves
Sloth, like rust, consumes faster than labor wears, while the used key is always bright
Dost thou love life, then do not squander time, for that’s the stuff life is made of
Lost time is never found again
He that riseth late, must trot all day, and shall scarce overtake his business at night
Drive thy business, let not that drive thee
Industry need not wish
He that lives upon hope will die fasting
There are no gains, without pains
Plough deep, while sluggards sleep, and you shall have corn to sell and to keep
One today is worth two tomorrows
Have you somewhat to do tomorrow, do it today
Be ashamed to catch yourself idle
Let not the sun look down and say, inglorious here he lies
He that hath a trade hath an estate
He that hath a calling hath an office of profit and honor
At the working man’s house hunger looks in, but dares not enter
For industry pays debts, while despair encreaseth them
Constant dropping wears away stones
By diligence and patience the mouse ate in two the cable
Little strokes fell great oaks
Employ thy time well if thou meanest to gain leisure
Since thou art not sure of a minute, throw not away an hour
A life of leisure and a life of laziness are two things. Do you imagine that sloth will afford you more comfort than labor?
Trouble springs from idleness, and grievous toil from needless ease.
Many without labor would live by their wits only, but they break for want of stock
Industry gives comfort, and plenty, and respect: fly pleasures, and they’ll follow you
Keep the shop, and thy shop will keep thee
If you would have your business done, go; if not, send
He that by the plough would thrive, Himself must either hold or drive.
The eye of a master will do more work than both his hands
Want of care does us more damage than want of knowledge
Not to oversee workmen is to leave them your purse open
In the affairs of this world men are saved not by faith, but by the want of it
Learning is to the studious, and riches to the careful, as well as power to the bold, and Heaven to the virtuous
If you would have a faithful servant, and one that you like, serve yourself
For want of a nail the shoe was lost; for want of a shoe the horse was lost, and for want of a horse the rider was lost

B. Franklin

Robyn said...

better off leaving the gold coins under a mattress then putting money in a bank.
ah, for the days of 5.25% interest and banks open 9 to 3, mon to fri, and they had ASSETS!