Are savers doomed?

[CA renter]

[quote=spdrun]Not doing as much as you think — only have a couple so far.

Honestly, my goal is to at least be able to sit and not have to lift a G-d damned pinky as far as buying or working (renovating is fine because it’s fun), not to slave away till I’m old, limp-dicked, and crippled.

If I end up making $100k per year from investments, essentially indexed for inflation, what more do I need? I don’t have expensive or refined tastes. I travel more like a student, haven’t bought new electronics in years, and have never spent over $3 grand on a car.

As far as the waistline thing, it’s actually a consequence of lack of time between white collar workers. No time to cook healthy food or buy a good lunch. No time to go for a walk in the park with family after hours. No time to visit a national park on one’s vacation, because they only take a week.

France is looking awfully good, even after recent unfortunate events there.[/quote]

+1, spdrun

[CA renter]

[quote=flyer]It still amazes me that only around 5% of the US population have a sustained net worth of over a million or more–which is really the “bottom
line”–regardless of age–or how you got there.[/quote]

I’m not at all surprised, unfortunately. Most people, even in the upper-middle class, are living paycheck to paycheck. IMO, this is because previous generations have had family or traditional pensions to rely on, so they didn’t have to save up so much money for their latter years…and their offspring are just carrying on their family traditions. Also, people have been led to believe that the future will always be brighter…that incomes and asset prices always rise, and that they will be the beneficiaries of these trends. Even other Piggs are hoping for this, as noted above.

And you have to remember that most people today are not nearly lucky enough to belong to unions which have benefited so many people — like your family and mine — over the decades . Even union members today are seeing much lower overall benefits than people who were retiring 10+ years ago. And both of us have benefited from having family resources in addition to union benefits. Many others have not had this opportunity. We have to acknowledge the role of luck and timing in our good fortunes; many/most others are not in the same boat. For that, we need to be more compassionate and we need to work hard every day to improve their outcomes, as well. That’s what I’m always fighting for.

Admittedly, I’m a long-term deflationist, and I think that we are in for a rude awakening. We need to reverse the trends that have brought us to this point (reforming taxes and trade agreements would be a good start). Keeping interest rates so low is not helping at all. We need people to spend more because their wages are rising, not because debt is expanding.

[CA renter]

[quote=moneymaker]I don’t think savers are doomed. It’s not about interest rates or deflation alone, it’s all about purchasing power for the savers, which is ironic since by definition they aren’t spending.[/quote]

In general, deflation is positive for purchasing power.

[CA renter]

[quote=FlyerInHi]CAr, when interest rates are high, money is in short supply. So speculators as you call them, just hold money. They don’t need to buy and sell things to make more money. That’s a great environment for people at the top with loads of cash.

Since you’re a long term deflationist, you shouldn’t lament low interest rates. Just hold cash and it will be worth more with deflation. There’s your nest egg.[/quote]

Once again, even if speculators hold their money (and savers are not speculators in the sense that I mean it), that money is still being invested or spent into the economy unless the savers are keeping their money under the mattress. Banks use the deposits as reserves for their lending.

———-

[edited to add]…

Also, higher interest rates don’t necessarily mean that money is in short supply, it could also mean that investors think risk is too high.

When money is dear, better decisions are made, destructive bubbles are far less likely to inflate, and speculation is reduced. IMO, the ratio of speculation to genuine productive investment is reduced. And people don’t bury themselves with debt for consumption. That is good for the economy over the long run.

[CA renter]

And for those who say they’d like to see higher wages, San Diego is one of seven cities where major campaigns are being fought. Volunteer, write, call, watch…just get involved. We can’t rely on others to do all the heavy lifting.

http://krwg.org/post/afl-cio-announces-raising-wages-summits-presidential-primary-states

In solidarity,

😉

[spdrun]

As a deflationista, shouldn’t you be against higher wages and for lower prices? i.e. more of an “end the Fed” sort of gal?

[barnaby33]

You might get a dip here or there but TPTB will do “ANYTHING and EVERYTHING” in their power to avoid it (for very good reasons BTW).

I’d love to here what “good” reasons those are. Not just so I can have a good chuckle, but so we can start the education cycle on piggington anew!
Josh

[The-Shoveler]

[quote=barnaby33]

You might get a dip here or there but TPTB will do “ANYTHING and EVERYTHING” in their power to avoid it (for very good reasons BTW).

I’d love to here what “good” reasons those are. Not just so I can have a good chuckle, but so we can start the education cycle on piggington anew!
Josh[/quote]
Good I want to be amused as well.

So I will start with the most obvious.
Those who have long term bills or investments (like power plants, Dams, bridges, schools and pensions) cannot survive a deflationary tax base.

Also banks who write long term loans will just stop.

[spdrun]

The costs of running the same would also drop in a deflationary environment. Some bondholders will be given haircuts — not the end of the world.

[The-Shoveler]

And for the next project you will get the money from where ?

So how many time can you do that ?

what interest will they demand next time?

(interest is a measure inflation btw)

In short deflation represents a shrinking and declining society.

[Myriad]

Concur with The-Shoveler. The entire western financial system is based on long term debt. If the entire world went deflationary, that system would collapse.

If money in the future was worth more, why would any bank or individual lend money? Hence the deflationary spiral and why the Fed and other central banks will do anything to stop deflation.

Yeah, it might make goods cheaper in the short term, but do you really want to risk a collapse and a severe economic depression?

2008-9 was the closest we got in recent times to the banking system collapsing. A real collapse would put everyone in a much worse situation, especially those on this board…

What’s the point of owning rental property if renters can’t afford to pay. And you wouldn’t be able to evict them lest you get lynched by a mob…

[spdrun]

Frankly, the world might need a collapse to set things back a few decades. Right now, the trend is to more control, more automation, more surveillance. It would be good if innovation was stopped in its tracks (or at least slowed down) for a few decades so we had time to think where society is going, and whether we want it to go there. Delay the Singularity, so to speak.

If it results in some level of mayhem, so be it.

[Myriad]

Like another world war or limited nuclear conflict?
Innovation won’t stop, it will just take a different form.

[an]

[quote=spdrun]Frankly, the world might need a collapse to set things back a few decades. Right now, the trend is to more control, more automation, more surveillance. It would be good if innovation was stopped in its tracks (or at least slowed down) for a few decades so we had time to think where society is going, and whether we want it to go there. Delay the Singularity, so to speak.

If it results in some level of mayhem, so be it.[/quote]
What make you think it’ll be only a few decades? What if it turns out to be a few centuries and the only ones left standing are the 1% and we all are sold into indenture servitude? The 1% can afford to buy their private armies to protect themselves.

[CA renter]

[quote=AN][quote=spdrun]Frankly, the world might need a collapse to set things back a few decades. Right now, the trend is to more control, more automation, more surveillance. It would be good if innovation was stopped in its tracks (or at least slowed down) for a few decades so we had time to think where society is going, and whether we want it to go there. Delay the Singularity, so to speak.

If it results in some level of mayhem, so be it.[/quote]
What make you think it’ll be only a few decades? What if it turns out to be a few centuries and the only ones left standing are the 1% and we all are sold into indenture servitude? The 1% can afford to buy their private armies to protect themselves.[/quote]

During deflationary times, the wealth and income gaps narrow, sometimes drastically.

Inflation is what gives the 1% their power. Deflation gives workers (and others living on a fixed income) more power. Asset prices fall much faster than wages, on average.

[Author]

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