In saner times of yore, people who spent their entire income were put down as spendthrifts, and people who didn’t were praised as savers.
It was well understood that savers financed the world’s productive capital and so helped to create the Industrial Revolution. The IR used capital to boost the productivity of labor, so that human beings could enjoy good stuff like higher living standards, longer lives, middle-class education and retirement, an end to infant mortality and child labor, etc.
In today’s crazy times, language is turned on its head (to keep the craziness going as long as possible). Savers are now called hoarders, people who hoard money.
Earlier this month, the Federal Reserve Bank of St. Louis published an analysis of our moribund economy, called What Does Money Velocity Tell Us about Low Inflation in the U.S.? The key sentences:
…the unprecedented monetary base increase driven by the Fed’s large money injections through its large-scale asset purchase programs [ed: Quantitative Easing, or “QE”] has failed to cause at least a one-for-one proportional increase in nominal GDP… [ed: though it has certainly boosted the financial markets for “the one percent”]
During the first and second quarters of 2014, the velocity of the monetary base2 was at 4.4, its slowest pace on record. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession…the sharp decline in velocity…has offset the sharp increase in money supply, leading to the almost no change in nominal GDP…
The answer lies in the private sector’s dramatic increase in their willingness to hoard money instead of spend it. Such an unprecedented increase…has slowed down the velocity of money…
(Emphasis added.) Get it? If only people would spend all their money, again and again – rather than hoarding it because they need it for bills, or worry about the future – THEN the economy would grow. THEN the Dear Obama-Yellen’s plans would work.
In reality, the economy is restrained by excessive debt and even more, by lack of freedom. As government gets bigger and consumes (or takes over) more of the economy, the private sector shrinks. As government plans, regulates and intervenes more heavily, the private sector gets sicker, lazier and more fearful. Just as Big Government creates more problems than it ever solves, the opposite – Freedom – ultimately solves more problems than it creates.
But that’s not what Establishment economists, politicians, bureaucrats and media want people to know. They’d rather blame, in this example, people who “hoard”. Look for the scapegoating of so-called hoarders to become a drumbeat, as the economy continues to languish into the 2016 election.
If we hit a new financial crisis, they’ll also be sure to scapegoat mysterious “speculators”, as President Nixon did in the 1971 crisis. But they’ll never put the blame where it belongs: on 8+ decades of money-printing and Big Government.
So if we are hoarding money does that mean that Bath House Barry will write an executive order confiscating it as happened in Cyprus where they took money out of everyone’s bank accounts.
Given that the dykes recorded the phone call where they played up the dykism with the order that caught them its obvious they where shopping for a Christian, yet leftists are hating on the Cake maker that went out of business. That would be like me calling up all the salons to make an appointment to wax my boyfriends ass, only to not make it with anyone that agreed to do so.
http://www.huffingtonpost.com/2014/09/29/melissa-klein-anti-gay_n_5901036.html
I live in a university town which is unusually well protected from unemployment and downturns due to government spending. However, all is not as it may seem. While foreclosures are well below the national or state average, new construction is at a standstill. The remodeling business is in the doldrums, as well.
Every one I know who is savvy about economics is waiting for the market bubble to burst. The key difference among them is how bad the crash will be. The belief is that Janet Yellin don’t know how to pull the plug on the funny money market support and is not particularly dedicated to shutting down the flow.
Why would anyone expand the employment rolls when the economy is sputtering and Obamacare looms with no way to estimate the costs?
Instead of chatting about why things are so unsettled, I would like to hear a plain Jane explanation of how the Obama people are fixing things and how we can identify the various benchmarks as the steam is pumped back into the economy. I am not holding my breath.
What these people can’t seem to understand is that those who save their money, by putting it into credit unions, banks, even mutual funds, are not really hoarding their money. The idea that there is this money bin somewhere that some rich duck is diving into like it was a swimming pool is prevalent and totally mythical. Those institutions lend that money back out. Every dollar of it. To people who are buying homes, cars, building businesses, even buying everyday things with credit cards.
Economies alway run on activity of the private sector, especially the Evil Big Businesses , most of which are neither evil nor big. All government can do is get in the way by taxing and regulating, or causing inflation by printing more money and spending more than they take in.
People need to know this. But our education system seems to be deliberately preventing students from finding this out.
Heliotrope, LOL – Of course you know you’ll be waiting awhile.
CS, yes. Just to be precise: we’re not anarchists here; the basic thing government should do for the private sector is, impartially protect people’s rights to life, liberty and property. But (1) they’re doing a poor job of it, and (2) yeah, the rest of what they do is basically just draining the private sector and stopping it in its tracks (as only government can do).
“I’m not spending enough?”
If the local economy here in NJ didn’t suck, I’d have more money to spend…
I feel like Obama is just trying to keep the plates spinning until he leaves office.