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Guest Post: Is Saving Money Bad For The Economy?

Tyler Durden's picture


Submitted by Gregory Bresinger via the Ludwig von Mises Institute,

Our grandparents believed in the value of thrift, but many of their grandchildren don’t.

That’s because cultural and economic values have changed dramatically over the last generations as political and media elites have convinced many Americans that saving is passé. So today, under the influence of Keynesian economists who champion government spending and high levels of consumption, thrift has been devalued.

“The growth in wealth, so far from being dependent on the abstinence [savings] of the rich, as is commonly supposed, is more likely to be impeded by it,” according to John Maynard Keynes’s The General Theory of Employment, Interest and Money.

“The more virtuous we are, the more determinedly thrifty, the more obstinately orthodox in our national and personal finance, the more incomes will have to fall,” he writes. “Saving,” Keynes wrote in his Treatise on Money, “is the act of the individual consumer and consists in the negative act of refraining from spending the whole of his current income on consumption.”

But saving, pace Keynes, isn’t “negative.” It is deferred consumption. “The great producing countries are the great consuming countries,” writes Benjamin Anderson in Economics and the Public Welfare. More importantly, high rates of savings will lead to higher productivity, which would benefit our children and grandchildren, classical and Austrian economists have explained.

“We are the lucky heirs of our fathers and forefathers whose saving has accumulated the capital goods with the aid of which we are working today,” wrote Ludwig von Mises in Human Action. Saving, ultimately, is consumption, writes Detley S. Schlichter in Paper Money Collapse. “By setting aside some resources for meeting financial consumption needs, we invest them.”

Nevertheless, Keynesian ideas dominate the Obama administration and mass media. Most politicians, including Republicans who often pretend to be friends of thrift and self-improvement, are tacit or overt Keynesians. That’s because politicians, whether they have studied Keynes or not, generally love the idea of cheap money. Most delight in spending taxpayer dollars. They believe this is the way elections are won.

This Keynesian dominance has led to dramatic economic and cultural changes. These changes have been going on in America for over a half century. For instance, the United States has gone from a nation with one of the highest rates of savings during the 20s to having one of the lowest rates among major industrial nations today.

Yet penalizing thrift, the lifeblood of job creation and better tools that make current workers more efficient, has hurt the nation’s ability to grow and employ millions of young people looking for jobs. That’s because Keynesianism, according to its modern interpreters, amounts to a celebration of consumption. It is a belief that government spending combined with low savings rates lead to permanent booms.

It is the government’s role, Keynes’s followers believe, to keep the boom going through spending. So it is consumption, not supply, that makes a successful economy, they say.

Mainstream media rehashes the message that the consumer, not the producer, is the biggest part of the economy. Politicians agree.

As the economy started to slow down in 2006, President Bush urged Americans to “go shopping more.” Newsweek, in a headline story several years ago, told Americans to “Stop Saving Now.”

This anti-saving philosophy is more than just bad macro-economics. It is the doctrine that has come to take over economic thinking, now dominated in the popular media by Keynesian economists such as Paul Krugman. In his latest book, End This Depression Now, he explains why growth rates are low. The administration hasn’t been sufficiently Keynesian enough. Obama’s stimulus, he complains, was on a “wholly inadequate scale.”

Keynesians of all stripes have constantly urged Americans, especially the government, to spend. The effect of this change has been more than numbers. It also changed how many Americans see the path to self-improvement. Joe Sixpack, the average American who once believed that through thrift, hard work and discipline he could save his way to a better life for his family, is the victim. Keynesian economists and mainstream media commentators often depict savers as selfish people.

Even the average person with his savings account, living in a Brooklyn tenement (I’m speaking of bus driver Ralph Kramden from the iconic television series The Honeymooners) must pay taxes on his measly $75 savings account. This anti-savings mentality has amazed some from nations where savings are viewed positively.

A former U.S. Commerce Secretary was asked by his Japanese counterpart in the 1970s in Pete Peterson’s book Facing Up, “please explain putting the highest taxes on what you call unearned income. We have always assumed that income from savings was the most earned of all. It is hard work to save, don’t you think?”

Tens of millions of baby boomers aren’t doing the hard work. They have little or no savings. How will Keynes and his scions’ misguided policies provide a decent standard of living for them?

America’s personal savings rate declined some 56 percent over the past 50 years from 1963-2012, according to the 2013 Economic Report of the President. The personal savings rate averaged just 3.8 percent in the decade between 2003 and 2012. That’s a big drop compared to the 1963-1972 period when it was 8.7 percent.

However, it’s worse than that. Since the end of last year, the personal savings rate has declined some more, dipping to 2.5 percent in March and April, according to the U.S. Commerce Department’s Bureau of Economic Analysis.

Even President Obama’s economic report, in documenting that savings rates are low, concedes that the recovery that began some four years ago is weak. The recovery, according to the president’s report, trails previous ones.

“From 1960 to 2007, the U.S. economy had seven recessions, and the annual rate of growth of real GDP during the 12 quarters following these recessions was 4.2 percent,” the presidential report said. “In contrast, during the 12 quarters following the trough in the second quarter of 2009, the average annual rate of growth of real GDP was 2.2 percent. After three years of recovery, the cumulative growth of real GDP was 6.3 percentage points lower than the average value for the earlier post-1960 recessions.”

Meanwhile, savers are penalized for their thrift. The Fed’s policies mean they receive almost nothing in interest.

Remarkably, President Obama, in the same report, in a move Keynes would have likely applauded, proposes to put a cap on qualified retirement plan balances. Apparently, the president agrees saving is “a negative act.”

These anti-saving policies should change, some say. A better tax code, one that promotes and doesn’t tax savings to death, will “mean more innovation, job creation and higher wages,” U.S. House of Representatives Ways and Means Committee Chairman Dave Camp noted when I interviewed him for an article in the New York Post.

“When workers see paychecks start to rise again,” Camp adds, “they will be better able to make decisions that best serve the financial needs of their family — including building up their savings.”

But that doesn’t necessarily mean Camp and others will now reject Keynes. Plenty of Republicans— consciously or unconsciously — have shown themselves to be philosophical followers of Keynes. And Camp, working on an overhaul of the tax code, might consider a logical measure: Why not drop all taxes on a savings and investment as a way to reverse decades of destructive economic policy?

That could be the most important decision for a generation of young people without work because doesn’t generate enough capital. It could also be critical for their parents who approach a retirement with a falling standard of living.

Despite the Keynesian sentiments of much of our political and media elites, we owe it to our grandparents to re-learn the lessons of thrift.


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Mon, 10/07/2013 - 19:48 | 4032448 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

Ending is better than mending.  The more stiches the less riches! Just enjoy your soma.

Mon, 10/07/2013 - 20:02 | 4032473 sunaJ
sunaJ's picture
Is Saving Money Bad For The Economy?


That is a silly question.  Perhaps it hurts a malignant, cancerous tumor economy, but saving has been - and always will be - a component of humanity.  It is a part of nature to store for a rainy day and it is expressed throughout our world.  I frankly don't give a shit if it is bad for this economy or not.  You may as well ask if it is a good idea to buy another porsche if you already have three...


Mon, 10/07/2013 - 20:02 | 4032490 knukles
knukles's picture

Whatever Krugman's for I'm against it!

Mon, 10/07/2013 - 20:07 | 4032513 nmewn
nmewn's picture

Money is meant for taxing and spending...get with the program!

You want babies to starve without ever knowing the glory of WIC & old people to die without ever knowing they served their "greater purpose" under ObamaScare of supplying soylent green protein for the worker drones!

Mon, 10/07/2013 - 20:11 | 4032520 kaiserhoff
kaiserhoff's picture

Always eat dessert first,

  because the Earth might be destroyed by a meteor.

Mon, 10/07/2013 - 20:56 | 4032642 Deo vindice
Deo vindice's picture

I am not sure about the national / international economies, but I do know saving is great for the economy of my household.

If every household lived within its means, AND insisted their various levels of government did the same, we wouldn't be facing a fraction of the problems we now are.

Mon, 10/07/2013 - 21:41 | 4032740 Anusocracy
Anusocracy's picture

The default setting for almost everyone is the instant gratification mindset of the hunter-gatherers.

That makes it so easy to convince them to be spenders, not savers.

Mon, 10/07/2013 - 23:09 | 4032928 TruthInSunshine
TruthInSunshine's picture

Paul "When Mars Attacks" Krugman professes that the most immoral thing any human being can do is to NOT spend all of their income & then go into deep and endless debt to acquire/collect mainly useless stuff, trinkets, widgets & objects.

Tue, 10/08/2013 - 09:00 | 4033344 RKDS
RKDS's picture

I don't think you actually read what Krugman writes.  It's pretty clear that he's talking about when super rich people take _all_ of the money out of the economy.  There's absolutely no harm in the average person saving a portion of their income (assuming that banks are lending versus gambling).  When some millionaire suit moves the factory to China and the profits to the Caymans, that's a different story.  In the big picture, it's not saving at all, but withdrawals from the US market which cannot be sustained indefinitely without deposits back into the US market.

Mon, 10/07/2013 - 21:33 | 4032724 wisehiney
wisehiney's picture

In that case, I want my dessert to eat me first.

Tue, 10/08/2013 - 01:43 | 4033117 Ghordius
Ghordius's picture

knukles said: "Whatever Krugman's for I'm against it!" - mhhh... Dr. Krugman is very "skeptical" about the EUR

Mon, 10/07/2013 - 20:03 | 4032500 NoDebt
NoDebt's picture

The great Keynesian lie is that what is good for an individual is bad for the economy.  It is not, nor has it ever been.  There is a time-delay in consumption introduced in periods of excessive savings as in periods of excessive borrowing, nothing more.

The great deciding factor is whether that savings or borrowing was put to productive use  If it was not, it's wasted.  If it is, it will pay dividends later.

Guess where we are right now.


Mon, 10/07/2013 - 20:06 | 4032508 Harbanger
Harbanger's picture

We're near the end of the keynesian debt based model.  At the point where saving money works against you if you're not invested.

Mon, 10/07/2013 - 20:14 | 4032521 NoDebt
NoDebt's picture

And by extension, if you can't save/invest in such a period of time, why not borrow to the hilt?  If savings is a drag, what then of debt?

I can't personally wrap my brain around such an idea because I'm genetically wired against being in debt (depression-era grandparents had a big influence on my financial upbringing) and I have personally been debt-free for quite a few years now.  Prior to being debt-free I can't recall very much.  My brain is very good at blocking out painful experiences.

Mon, 10/07/2013 - 22:37 | 4032856 Balkan
Balkan's picture

The big difference:

You save -> you spend your own money -> you're independent

You borrow -> you repay your own money -> you're dependent

Mon, 10/07/2013 - 19:52 | 4032455 James-Morrison
James-Morrison's picture

There is no need to save money.  

The FED produces as much excess savings as required.

Mon, 10/07/2013 - 19:59 | 4032459 Muppet Pimp
Muppet Pimp's picture

If one does not save, i.e. if one never 'owns' any assets they are a mere debt slave, dependant upon the ever increasing debt of the state et. al. to sustain them.  When the ponzi event horizon comes, they are what is commonly referred to as homeless or 'bums'.  The nice house, the expensive cars, the spot in the best private school in town, they all end up the property of the saver when the edifice collapses.


Mon, 10/07/2013 - 20:15 | 4032529 Bryan
Bryan's picture

property of the saver?  You think our benevolent government will let its citizens actually keep their assets if the SHTF?

Mon, 10/07/2013 - 22:22 | 4032832 NidStyles
NidStyles's picture

It's not the government you should be worried about. It's those that only exist because of the government largesse allowed them to exist that are the real threat.

Mon, 10/07/2013 - 19:55 | 4032466 Mototard at Large
Mototard at Large's picture

Banks, Terrorism and other Existential Threats: The Real Invisible Hand

A request for assistance from ZH readers (known for being enthusiastic commenters) :

We have prepared a series of three papers and a podcast on the dangers of the use of fiat/digital currency combined with the near total dependency of most of our economies on the international payments and settlements system.  This leaves us vulnerable to a systemic collapse, an insider threat and/or a foreign attack (read China, Iran, Hezbollah).  In short, banks and anyone who deals with a bank is on the frontline of a new form of warfare.

These research papers and the podcast mark the first time that anyone has been drawn attention to the line between fiat vulnerability and the payments and settlement system. We will be writing a fourth paper on potential solutions and options for moving ahead. Any comments or ideas are welcome here or at


** *The Broken Mirrors website is not set up to be a for-profit website or business (yet).   However, we do intend to make the transition to making money sometime in early 2014 as we develop the work on the site and an associated online training program. In other words, no direct financial gain from this posting.


Banks, Terrorism and other Existential Threats: The Real Invisible Hand

We can begin the discussion with a simple proposition: what bankers are allowing to happen (consciously or not) at Central Banks and Financial Institutions is far more fearsome than what terrorists have planned in the past. A failure of their jointly operated payments and settlements system would do more systemic damage to the advanced economies than any terrorist attack has done to date. The payments and settlements system is virtually invisible to the public, intelligence and security agencies and most politicians. Yet this ‘invisible’ system has implicated itself into the everyday lives of the populations of almost all of the developed economies.

The other invisible factor lurking in the background is the fiat currency system used by almost all developed nations. Those bank notes in your pocket or wallet are called ‘fiat currency’ as there is little to nothing that supports them other than pure faith – which is by definition invisible.  When individuals lose faith in their government or their financial system, the currency can become nearly worthless in a rapid manner: history is littered with failed fiat currencies.

The intelligence community as a whole has not seriously examined the potential for the application of the use of force (cyber or otherwise) within this economic domain. Nor is it clear that most Western governments have any ability to respond to such an attack (or internal failure) should such an event occur. As Jason Healey, the former White House Director of Cyber Infrastructure Protection noted in a recent address, if the United States is engaged in a cyberwar, Americans would be far better served by contacting Microsoft or AT&T rather than the Department of Homeland Security.

For more on this see:

Banks, Terrorism and other Existential Threats: The Real Invisible Hand  (intro, list of papers and links)

The Invisible War in Your Wallet – The Sixth Domain of Warfare is You  (the invisible links between banks, terrorism and existential threats, the international payments and settlements system, the existential threat resident in the current limitations of the (il)legitimacy of the fiat currency system, impact of a failure on the economy and you)

Welcome To The Front – Social and Economic Warfare is all about You (future scenario involving the People’s Republic of China, China’s capabilities and intentions, how a potential conflict scenario could develop, previous payments and settlements attacks and failures, conclusions about the state of system security)

The Transformation of the Sixth Domain: Economic Warfare and You in the Information Age.  or at     Podcast (economic warfare, scenarios, fiat currency history, fiat currency current situation, pushing back against the system, community resilience)

FUTURE PAPER: We intend to write one more paper on the payments and settlements system which would identify the path ahead.  Reader comments and ideas will be included and we want your views!  This paper will address issues around the functioning of ATMs in the event of a payments and settlements crisis and whether or not individual FIs would be able/willing to provide cash to only their own customers.  Would this cause a run on the banks?  If there is a breakdown in the payments and settlements system, what would happen to note exchange and provision systems and how would cash get to the FIs?  What would be the effect on securities exchanges, cheques clearing, retail debits, direct deposits, derivatives and foreign currency exchanges? How would they be settled without the payments and settlement system?

Please leave comments here or send directly, in confidence, to

Mon, 10/07/2013 - 20:27 | 4032556 socalbeach
socalbeach's picture

I'm extremely concerned about an attack by Hezbollah. I hear they're very good at making tunnels, and they could be tunneling through the center of the earth right now to attack the U.S.

Mon, 10/07/2013 - 19:55 | 4032469 lasvegaspersona
lasvegaspersona's picture


If we did not save in the medium of exchange then there would be lots of currency to spend and yet savers would not get screwed (as they always do). hmmm save gold, spend (and do not hoard) paper....

Mon, 10/07/2013 - 20:04 | 4032498 knukles
knukles's picture

Gresham's Law

Mon, 10/07/2013 - 22:20 | 4032825 NidStyles
NidStyles's picture

Only applies ina system where the legal tender is declared by government rather than by the markets themselves.

Mon, 10/07/2013 - 20:00 | 4032482 0b1knob
0b1knob's picture



How dare people not spend the money that the government has gone to such trouble to print?

Mon, 10/07/2013 - 20:12 | 4032517 grid-b-gone
grid-b-gone's picture

Nice add-on to George's list.

Mon, 10/07/2013 - 20:45 | 4032604 Brett Merkey
Brett Merkey's picture



"Saving is Theft" pretty much sums every measure they take to strip us of the dignity of citizenship and mold us into consumers. Even when a person defies convention and convenience to live a simple life and save--the government and the banks penalize and continue the theft in the most real sense.

The von Mises Institute stuff has insights I like to learn from but still, they seem professorish and utopian, with no practical paths proposed to get from here to there.



Tue, 10/08/2013 - 10:46 | 4033099 James
James's picture

"with no practical paths proposed to get from here to there".

That could be explained by the Mises Institute recieving funding from the Rockefeller Trust.

Are you sure they want you to get from here to there?

Mon, 10/07/2013 - 21:56 | 4032776 MissCellany
MissCellany's picture

I might spend some of it, if I were seeing any of it.

Of course, I'd put the rest into phyzz and take an unfortunate boat trip.

Mon, 10/07/2013 - 20:03 | 4032494 Seasmoke
Seasmoke's picture

Why save when you can always take at the threat of force. 

Mon, 10/07/2013 - 22:06 | 4032804 XitSam
XitSam's picture

That's the government's theory anyway.

Mon, 10/07/2013 - 20:04 | 4032502 Manthong
Manthong's picture

They pay no interest..

Depositors are unsecured creditors to banks.. behind other banks and funds in the derivatives markets..

The whole system is hanging by a synthetic thread..

The market is a risk environment.. equities are synthetics.

Saving is only worthwhile in hard assets and mattresses. 

Mon, 10/07/2013 - 20:09 | 4032503 wisehiney
wisehiney's picture

Frugality may be termed the daughter of Prudence, the sister of Temperance, and the parent of Liberty.

  ~Samuel Johnson - (also, Patriotism is the last refuge of a scoundrel.)

Mon, 10/07/2013 - 20:06 | 4032505 monad
monad's picture

The Greeks & Romans built to last for ages. The current flock is conditioned to 'throw away' values, in order to justify continuous marketing, production, regulation, taxation and consumption. It makes it easier to adapt after the surplus population is disposed of. 

Mon, 10/07/2013 - 20:08 | 4032509 grid-b-gone
grid-b-gone's picture

From Econ 101 over 20 years ago,

Savings is a personal virtue, but an economic woe. Similarly, the concentration of wealth is a societal negative but a personal benefit. 

When people I know buy something, usually expensive, that weakens their financial plan, they often comment about helping the economy. 

Even the spendthrifts understand they are adding to the velocity of money and vibrance of the economy when they do more consuming than saving.

Mon, 10/07/2013 - 20:36 | 4032582 Diogenes
Diogenes's picture

Where do they think savings go when you put your money in the bank? Do they suppose the money  disappears? Don't they know the banks lend it out right away?

Saving does no harm in the short run and does much good in the long run.

Mon, 10/07/2013 - 20:59 | 4032645 Manthong
Manthong's picture

Did I miss an implied sarc?

Unless I am mistaking, that was to some degree true prior to Clinton’s 2000 CFMA.

Nowadays, your savings (and Fed borrowing) goes immediately to some synthetic betting instrument.

Little makes it back out to the economy.

Tue, 10/08/2013 - 10:16 | 4033637 Diogenes
Diogenes's picture

Try putting your savings in your local credit union. The money will be loaned to someone in your community in a few days.

Mon, 10/07/2013 - 20:14 | 4032528 Shell Game
Shell Game's picture

In a collectivist Hive, the question is relevant. 

Mon, 10/07/2013 - 20:17 | 4032533 eddiebe
eddiebe's picture

Saving money is bad for the individual but great for the state. Because of real inflation the money slowly (or not so ) vanishes into thin air. To the economy we have in the US it is irrevelant, because it is created by appearent magic.

Mon, 10/07/2013 - 20:21 | 4032541 SubjectivObject
SubjectivObject's picture

Long as you can make the minimum payments, we'll let you play along. 

But get unemployed or retire, and, for all we care, you can just FOAD.

Mon, 10/07/2013 - 21:19 | 4032557 Anonymouse
Anonymouse's picture

If Keynesians consider savings to be bad, is that because it is only for the elites, but bad for us plebes who don't know the proper way to invest?  Probably.

Other possibilities:

- All savings are bad, but that makes no sense.  If everyone spends all they have, then how would the goods that are to be produced be financed?

- No savings are bad, but that's the opposite of what they say

- There is a Laffer Curve of savings optimization.  Saving nothing is bad, saving everything is bad.  Somewhere in the middle is an optimal amount of savings.  If so, what is that amount, and how do our political masters determine that rate of savings?  How does it fit in with ZIRP?

The only other possibility is that Keynesianism is utter nonsense.

Mon, 10/07/2013 - 22:20 | 4032822 NidStyles
NidStyles's picture

That last line is your answer.

Mon, 10/07/2013 - 23:26 | 4032971 Anonymouse
Anonymouse's picture

Agree the last sentence is the true answer, but I think the first paragraph likely is the Keynesian mindset.

Mon, 10/07/2013 - 22:46 | 4032877 mrpxsytin
mrpxsytin's picture

I liken Keynesianism to running an engine in the red zone. Sometimes you need that short burst of power to manouvre away from danger, or make a quick change in direction. However, as we know, running the engine at high revs for an extended period of time is terminal. But then again, it seems that millions of people love to watch engines exploding (e.g., drag races, and other motor sports). So maybe we just need to sit back and enjoy the show... 

Mon, 10/07/2013 - 20:30 | 4032561 akak
akak's picture

Let's be specific here --- our saving is bad for them, as it is just another manifestation of self-sufficiency (financial self-sufficiency in this case) that must be stamped-out in order to make all of us serfs more dependent upon, and subservient to, those in economic and political control.

Mon, 10/07/2013 - 20:31 | 4032567 Debt Slave
Debt Slave's picture

Keynesian economists and mainstream media commentators often depict savers as selfish people.

That's right folks. I'm selfish because I saved for 30 years, thus assuring that I won't be a burden on any of you in my old age. What an inconsiderate, selfish thing to do. My reliance upon myself is a shameful behavior that hurts the economy. Yeah.

Keynesian economics has it's roots in marxism.

Mon, 10/07/2013 - 21:46 | 4032756 Anonymouse
Anonymouse's picture

Selfish bastard

Mon, 10/07/2013 - 22:52 | 4032897 Torgo
Torgo's picture

Well said. The most charitable thing a person can do is to never be reliant on charity. If that be selfish, then so be it, because self-directed and self-benefitting action is the essence of life. But Obama and his leftist minions hate the essence of life itself.

Mon, 10/07/2013 - 20:31 | 4032568 Diogenes
Diogenes's picture

You would think savings disappear from the economy when we put them in the bank. Not so. The bank lends the money out so it goes back into the economy right away.

What is more if the money is invested in some productive business it does more for the economy than if it is spent on consumption.

In other words saving takes nothing from the economy in the short run and is of great benefit in the long run.

I'm surprised no economist has figured this out in 100 years.

Mon, 10/07/2013 - 20:42 | 4032598 Debt Slave
Debt Slave's picture

You mean, they stopped teaching that in high school?

Mon, 10/07/2013 - 21:15 | 4032681 nmewn
nmewn's picture

Yes, they did.

It became, you must not save. You can be anything you want to be without any real forethought whatsoever, chase your dreams. You must go into debt now, for college, before you wake up, for anthropology, for poli-sci, for journalism, you do want to change the world don't you? We, as your educators, say its best for you and thats what you really want, regardless of your aptitude and it is practically frrreeeee!...right?

And, if it doesn't work out, well, we got ours.

Thanks ;-)

Mon, 10/07/2013 - 20:36 | 4032577 I Write Code
I Write Code's picture

It's always a good thing when you buy what I'm selling.

Mon, 10/07/2013 - 20:47 | 4032601 Harry Dong
Harry Dong's picture
  •   and anyway, so just where are we to get this "saved money?" -SNL link not provided.-
Mon, 10/07/2013 - 20:43 | 4032606 disabledvet
disabledvet's picture

We would have ZERO savings right now if not for the Government. In other words just because you have deposit insurance doesn't mean it gets honored. Interestingly where there is no deposit insurance (Europe) they went directly after the deposits in the bank. So before saying anything about "is savings bad" the standard must be "is savings allowed." Believe me if you believed in your rhetoric about this Administration you would not be complaining about the banks right now. Having said that it IS incongruous to me that we can run trillion dollar deficits and run moral hazard on a grand scale and not be "penalized" via the interest rate. In other words I do agree savers are not being properly remunerated given all the "hanky panky." I've tried to explain it...but I can't. Best I can do is point to energy, energy and energy. If this "yields" a general rise in prices (up until this year this sure has been true) then clearly we are on an out of control path. So far however Le Etat has maintained "ludicrous speed" amazingly well. What is lacking is a recovery at large and what I view as an odd form of "defensiveness" relative to creating expectations of recovery. "The world is in this together" strikes me as the way to go.

Mon, 10/07/2013 - 21:26 | 4032635 wisehiney
wisehiney's picture

Hoisington Management, Antal Fekete and Robert Prechter explain it best. The credit markets are many times larger than the printing. Just look at levels of debt. Credit is deflating faster than they are printing, basically. The debt burdens weigh on the economy to keep rates down. Better yet, Read their stuff. Lot's of it out there for free. Deflation comes before they freak out and destroy the currency. These pussy boy keynesians believe in FAIRY tales, cause that is what they are. 

Mon, 10/07/2013 - 22:38 | 4032855 mrpxsytin
mrpxsytin's picture

We would have ZERO savings right now if not for the Government. In other words just because you have deposit insurance doesn't mean it gets honored. Interestingly where there is no deposit insurance (Europe) they went directly after the deposits in the bank.


I understand the point you are making. And, generally it is acceptable on a superficial level. However, if you delve deeper into actually what has happened you will see that the government measures have only built a wealth effect, which is an illusion of wealth, not to be confused with real wealth. Yes, you may still have tokens in your bank account, trading account, superannuation account, etc. But how many people can actually get their hands on their tokens at the same time? 

Real savings would allow any number of people to convert them in to cash at any point in time. Illusory savings cannot facilitate large numbers of withdrawals. So which do you think our government has 'preserved'? The real or the illusion?

Mon, 10/07/2013 - 21:00 | 4032654 GubbermintWorker
GubbermintWorker's picture

I don't save money. I believe in stimulating the economy so I buy gold and silver with all my spare money.

Mon, 10/07/2013 - 21:04 | 4032666 Blubaba
Blubaba's picture

Austrian Economics 101:

The savings of today is the consumpiton of tommorow

Mon, 10/07/2013 - 21:57 | 4032780 yogibear
yogibear's picture

There is no tomorrow, they spent all of it.

Tue, 10/08/2013 - 01:09 | 4033087 dark_matter
dark_matter's picture

Yes, but the saver and the consumer are no longer the same person.

Mon, 10/07/2013 - 21:16 | 4032678 W74
W74's picture

Why save money when you can lease a 2015 Cadillac Escalade? 

Or if you don't like leasing you can just make monthly payments for 84 months.

I mean, if Obama is already paying for your housing, food (and maybe some Dizabiwidy payments), daycare, and phone then you have nothing to worry about.

MSRP: almost 65K (not including spinner rims and/or town-covering sound system)

Mon, 10/07/2013 - 21:21 | 4032683 Constitutional ...
Constitutional Republic's picture

All economies rely on the savings of honest labor. Debt is a prison, one way or another. 

Individuals should be a bit canny about this. Pay off the credit card debt within a month.

.govs worldwide like willing debt slaves, all the easier to control and own the people, for the Internationale.

Better yet: pay cash. Negotiate a discount with the retailer who is being schtumped by the credit card company.

An old joke: why did God invent gentiles? Someone has to pay retail.

Mon, 10/07/2013 - 21:33 | 4032710 Radical Marijuana
Radical Marijuana's picture

"von Mises Institute"

As soon as it says that, I expect the article to be polite and superficial. Inside of a system which has already become money-as-debt, then saving is for suckers. However, to fix that problem takes facing that the money-as-debt system is the result of the runaway triumph of organized crime being able to take over control of the government!

To be less polite and less superficial, the money system is based on measurement backed by murder, where the debt controls depend on the death controls. Von Mises is nice intellectualism, that stays away from the deep end of that pool, while it paddles around doing its water ballet in the shallow end.

Of course, in principle, there should be an effort to conserve and recycle energy, which takes the symbolic form of "saving money." However, since there is no meaningful money, nor any private property at all, outside of some system of public violence, the deeper dilemmas are how can one save "money" when the deeper value creating element is the ability to rob, and to back up that robbery with the power to kill?

Of course, in principle, saving should make sense. However, it can not actually make sense outside of the paradoxical ways that everything revolves around militarism, as its necessary ideological foundation. All the versions of "economics" that I am aware of pretty well deliberately ignore ecology. They deliberately refuse to look at human energy systems, as embedded in the bigger overall energy systems. Rather, they want to persist in the anthropomorphized versions of economics, where human symbols are taken seriously, without being traced back to how they really work within the actual energy systems.

The current monetary system is the result of organized lies, operating organized robberies, which benefit the best liars. In that context, "saving" is for suckers, since they become the food for the speculators. Since most savers tend to be sheeple, who do not understand, and do not want to understand how the real systems work, which is as organized robberies, they do not provide any effective resistance against being defrauded and robbed.

IF, through a series of political miracles, the sheeple savers were to wake up enough, then they would have to also take more responsibility for the death controls which make the monetary system have real meaning. Without that, then they will continue to be deliberately ignoring the reality of how human energy systems operate within the context of natural energy systems, and continue to rely upon polite, superficial human symbols to provide them with enough meaningful rewards, in order that they will continue to think that accumulating tokens of those meanings is somehow worthwhile to do.

Although I tend to think that the Von Mises school of economics is better than the Keynesian, since Von Mises tended to understand that "money" was a human symbol, more than the Keynesians, who attempted to ignore that fact, since they wanted to reify the established financial frauds, both tend to ignore how human systems work within natural energy systems.

Human symbols do not mean anything unless they are backed up with force. Saving symbolic tokens does not make sense unless one is operating within a coherent system that is going to enforce the meaning of those symbols. Thus, the supreme ideology continues to be militarism, and there are no sane "savings" unless that is done within the context of preserving the murder system, in a coherent way. That has become extremely problematic in a world where there is global electronic fiat money, backed up by nothing but atomic bombs.

Saving social symbols only makes sense within taking for granted that there is a sane and stable sovereign power, that is going to continue to back up those monetary symbols. However, the American sovereign powers have been taken over by international banksters, who are neither sane, nor stable, but rather, collectively a runaway triumphant group of trillionaire mass murderers, who have no plans other than to continue to do what they always did, only way more so!

The question "Is Saving Money Bad For The Economy?" is being asked in the context of this article by someone looking in the Bizarro Mirror World, where everything is backwards, and distorted, but that is not being appreciated by the author asking that question.

The human economy could make much more sense if it was consistent with the understanding of all energy systems generally. However, in order to do that, the arbitrary human symbols we call "money" would have to go through a profound series of paradigm shifts in the ways that we were perceiving everything. Inside America today, most people are still acting like they can take for granted the notion that the American sovereign powers are sane and stable, even though that is clearly no longer the case!

Saving energy, in the sense of nonlinear flows of energy, makes great sense, since then there would be more overall life and consciousness. However, that can not be coherently done as long as the death control aspects of the murder systems that back up the monetary systems are deliberately denied and suppressed, while being actually operated through the maximum possible deceits and frauds. Of course, there are good theoretical reasons for WHY the real money systems are measurements backed by murder. However, unless those reasons are systematically appreciated, and operated through, then saving "money-as-debt" is an absurdity, since that kind of money only exists as debt, and therefore, must be spent to exist. Tinkering with the taxation system in order to encourage saving is a trivial quick fix in that context. "Keynesian ideas dominate the Obama administration and mass media" because they justify the banksters' financial frauds. However, Von Mises' followers propose silly, shallow alternatives, which are only insignificantly better.

Unless monetary systems are reconciled and consistent with radical understanding of energy systems, then they are not being understood in any remotely close to sufficient way. THE DILEMMA THAT ARISES WHEN ATTEMPTING TO DO THAT IS IT BECOMES PLAINLY OBVIOUS THAT GOVERNMENTS ARE ORGANIZED CRIME, CONTROLLED BY THE BEST ORGANIZED GANGS OF CRIMINALS, AND THAT ANY IMPROVEMENTS CAN NEVER BECOME MORE THAN BETTER ORGANIZED CRIME.

In that context, I regard Keynesian economics as the rationalization of the way the best organized criminals actually operate their real systems, while Von Mises' kind of economics is one of the varieties of controlled opposition to those established systems, which nevertheless stays within the same overall frame of reference, and therefore, talks about "saving money" without any greater ecological context regarding the limits of evolving energy systems.

Mon, 10/07/2013 - 21:38 | 4032728 Constitutional ...
Constitutional Republic's picture

The Constitution and Bill of Rights dealt with all these issues. Defend that or die on your knees.

Tue, 10/08/2013 - 02:13 | 4033125 Radical Marijuana
Radical Marijuana's picture

I agree, Constitutional, "in principle." In many ways the history of America is the back and forth relative freedom, then enslavement, then fighting through to freedom, only to succumb to being enslaved again, by the systems set up by the international bankers. The history of the USA would be very boring without the revolution and Presidents like Andrew Jackson. However, since 1913, the international banksters have been in control, and that has runaway, with them being able to leverage more and more control over practically everything, to the point where there are no practical ways to compete with their political power.

The original, constitutional, bimetallic money standard was undermined and annihilated by the international banksters runaway triumphant frauds. It may be interesting to day dream about what would America look like if that had never happened. What if American money was still backed by gold and silver is an interesting question. However, IT IS NOT, and has not been for a Century. Thus, there is no way to go backwards to what should have been, or could have been. Everything that could be robbed has already been robbed. Systematically using the power to make "money" out of nothing has enabled a tiny group to end up owning almost everything that is worth owning.

I doubt that enough of the Zombie Sheeple Americans will be able to prevent themselves being mass murdered by the international banksters, since that appears to be what is actually being planned and implemented, without any effective opposition so far ... The collapse of the American Dollar as the world's reserve currency, and all the bizarre, self-destructive policies that the American government has adopted, which act against the interest of the vast majority of Americans, would trigger such extreme and acute hardships that that could precipitate some severe crises! Meanwhile, the overall divide and conquer strategy seems way too well advanced to prevent Americans fighting each other, but being unable to coherently resist the international banksters.

Anyway, I get my sense of political morality from the study of evolutionary energy systems, not from some other notions of popular enlightenment. I do not think we can go backwards to the old-fashioned constitutional framework, with its bill of rights. Instead, we are going to be forced to go forwards, through the social storms which will be caused because the constitution and bill of rights, and pretty well  the entire rule of law, has been so systematically destroyed by the success of the banksters in corrupting the political processes, for so long, that the coming social storms will surely go off the scale of anything in previously known human history.

Mon, 10/07/2013 - 22:21 | 4032765 wisehiney
wisehiney's picture

You may want to name the root of the "energy systems" and "militarism", it is immorality. Morality is surely the old foundation. Corruption, depravity and evil are the new hopeless base. Really very simple.

Tue, 10/08/2013 - 02:19 | 4033133 Radical Marijuana
Radical Marijuana's picture

Well, wisehiney, my view is that energy flows down the path of least action, which is referred to as the path of least resistance. Human civilizations manifest that by flowing down their path of least morality. To change the path of least morality takes organizing resistance, in ways which change that path.

I do not think that there are any fundamental dichotomies. The ruling classes have evolved to become the top carnivores in the human ecology, while their prey have developed to fit into the overall system too. There are chronic political problems which are inherent to the nature of life. What appears as immoral to the prey is considered moral to the predators, according to their own code.

Throughout the evolution of life, over and over and over again, ecosystems have evolved with niches of herbs, herbivores and carnivores, which optimize the overall flow of energy, over the longer term, as those survive and adapt through the vicissitudes of fate, to maintain their own level of diversity.

Human ecology has done that within itself. Personally, I tend to be more disgusted by the Zombie Sheeple than I am by the people who act like Vicious Wolves. I do not like the Black Sheep much more than the Domesticated Dogs either.

Anyway, my own sense of morality is based on the view that some death controls MUST EXIST. I do not agree with the lies that they do not exist, or should not exist, which are what the establishment, and its controlled opposition, promotes as impossible ideals, based on false fundamental dichotomies.

I regard primitive warfare as having been the best set of solutions possible at that time to the chronic political problems which were always present. I do not share the notions that the elites are simply evil, because they choose to be so. I believe that they are providing useful functions acting as the top carnivores in the human ecology. However, given that science and technology have made them trillions of times more powerful, they SHOULD go through radical paradigm shifts with regard to how they do what they do.

My idealized morality metaphor continues to be that everyone should learn to become better wolves, NOT that everyone should learn to become better sheep. I do NOT think that is "Really very simple!"

Tue, 10/08/2013 - 06:51 | 4033230 wisehiney
wisehiney's picture

We may agree....survival of the fittest...Simple!

Mon, 10/07/2013 - 23:04 | 4032920 mrpxsytin
mrpxsytin's picture

Thanks for taking the time to write this. It gives me hope to see that some people get it... 

I don't think we will make any significiant changes as a species anytime soon. At the moment the ape really only understands violence. It seems to be the lingua franca for the forseeable future.

I really want to know how people like us, who don't want to be involved in a murderous system, can maintain our integrity in this system? We don't seem to have the ability to opt out. Any advice is much appreciated. Sometimes I feel depressed and angered by the situation. Where/how can a freeman exist???   

Mon, 10/07/2013 - 21:49 | 4032761 icanhasbailout
icanhasbailout's picture

If we had an economy

then savings would be good.

Mon, 10/07/2013 - 21:58 | 4032786 yogibear
yogibear's picture

Instead of the economy now we have the Federal Reserve.

Mon, 10/07/2013 - 22:16 | 4032816 NidStyles
NidStyles's picture

Save money by trading your currency for it.

Mon, 10/07/2013 - 23:05 | 4032918 ebworthen
ebworthen's picture

Why should I save?  So it can be stolen?

Why should I invest?  So it can be devalued by Wall Street or taxed away at the whim of Washington?

The harder I work and the more I save the more of my labour they will steal for their champagne and caviar.

Hang the fuckers, and bleed the system.

Fuck you people, contract broken.

Tue, 10/08/2013 - 01:22 | 4033057 Kirk2NCC1701
Kirk2NCC1701's picture

"Saving" = Reducing the VoM.

Which really pisses of the Fed, and they have to compensate with CTRL-P.

Tue, 10/08/2013 - 10:22 | 4033659 Brazen Heist
Brazen Heist's picture

The middle class are are getting ass fucked so much by the elites because the elites know that the middle class is the engine that drives the consumer economy and they must have them spending at all costs, not saving. The incentive structures are therefore skewed in favor of the rich, because only the rich can be allowed to save, as they "reinvest their earnings" to grease the wheels of the casino finance machine, and that's why they get tax breaks and the middle class doesn't.

This is why we have the class war Obummer doesn't want to talk about.

Tue, 10/08/2013 - 11:20 | 4033888 ImpotentRage
ImpotentRage's picture

Not only are savers being fucked by almost non existent interest rates, but also the knowledge that the government will steal said savings any time now.

That is what stopped me from saving, to be honest. I USED to save, until Cyprus happened and that mentality started spreading. If I'm gonna be left without any money anyway, may as well use it to buy something I want instead of getting it flat-out stolen.

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