Keynesian Knightmare: US Savers Outnumber Spenders By Record Numbers

Tyler Durden's picture

"Janet, we have a problem," is the resoundingly loud message from the latest Gallup poll of Americans preference (and relative enjoyment) of "saving" vs. "spending". It seems, despite all the hoop-la and exuberance about an 'economic recovery' that is pent-up due to weather but about to break out to escape velocity, the majority of Americans continue to enjoy saving money more than spending it, by 62% to 34%. The 2014 saving-spending gap is the one of the widest since Gallup began tracking Americans' preferences in 2001. How long before a discussion of negative rates re-appears as the rich and powerful Oz-ians contemplate the latest effort to 'change' people's mass psychology...

 

 

As Gallup concludes, while this question does not measure actual spending or saving, it provides important insight into the psychology of the American consumer's approach to money.

At this point, the trend suggests that Americans have shifted their mindset significantly more toward the view that saving is the more enjoyable behavior, not spending.

Reality 1 - 0 Fed/Keynes

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pods's picture

Don't worry, once the FRN loses reserve currency status things will change.

If you aren't turned to carbon in a blinding flash you might get to enjoy the next system as it is set up.

pods

hobopants's picture

I'm hoping for a "peaceful" implosion rather than a false flag and another war. I guess that makes me a species of optimist?

Winston of Oceania's picture

It will likely only make you extinct, a plan you don't need saves your ass far better than no plan will even if you never use it.

czardas's picture

I've started to encounter this type (one paycheck from disaster) more and more.  What I discover is that most want the marketed $175K lifestyles on a $35K budget - largest cable package, smart phone, new car, lottery player, eat out frequently, homes and vacations they can't afford.  Not blaming marketing - just the inability of folks to stop spending when they don't have it. 

dobermangang's picture

These people better spend before they go bankrupt.

http://www.youtube.com/watch?v=LHFEcyUNBjg

rsnoble's picture

#1:  Don't stand too close to that launchpad

#2: How to increase spending:  Simple.  Raise all taxes.  Keeps the parasites employed that's all most of them care about.  Yep, as long as the cunt at the courthouse can wear a different $150 turtle neck and crotchless panties with a buttplug everyday everything is AOK with them.

Dr. Engali's picture

How is that even possible when nobody has any fucking money?

NotApplicable's picture

The chart doesn't show actual savers, but rather, wannabe savers.

headhunt's picture

I don't know about you but I am following the lead of the Fed and have started depositing my monopoly money

Kirk2NCC1701's picture

But they have "credit".  Finance now, pay off later.  ;-)

Seriously though, this means that Sales will get more Darwinistic in all fields.  Therefore... plan to be the best, plan to move up, or expect to slide down and out.

cro_maat's picture

I have been preaching this since 2009 and still amazed at at the sales people who don't get it. If I am not #1 or #2 in sales at my company, then I know I am on the chopping block. Headhunters hate to call me because I laugh at their offers. What good is a $25 k raise when you know you can be laid off 3 mths into the new job because you have no track record and their ship is sinking. Better to outcompete in a market you dominate and not get your feet wet when the tide comes in.

1stepcloser's picture

Kenyan nightmare...Keynesian Knightmare...I'm fucking losing my mind

LawsofPhysics's picture

What are they "spending"?  Paper and digital "credits" of increasingly diminishing "value"?

 

makes sense to me...

Rising Sun's picture

Foodstamp usage is obviously included in this data.

Rehab Willie's picture

the .0001% account for 99.9999% of the savings

Warhead's picture

"Americans prefer giving their money away slowly vs. Doing so quickly."

Smegley Wanxalot's picture

if 62 people are saving $1 per month, and 34 people are borrowing $5 per month, the Yellen's panties are wet and moldy

WTF_247's picture

Easy solution : account value tax.

 

Anyone with more than $1,000 avg balance in an account must pay a 5% tax per year on the value of the account.

swmnguy's picture

Anybody who has accounts at a big bank already pays that.

Smegley Wanxalot's picture

They do that already.  It's called 0% interest when the interest rate should be 5% or more.

CHX's picture

In real terms, yes. But not in nominal terms, yet.

swmnguy's picture

"Keynesian Knightmare?" That might be so if there were anything remotely Keynesian about US monetary and economic policy.  We can't say stimulus hasn't worked because there has been no stimulus.  Opening up the Treasury to sop up worthless debt instruments and recycling that money through Treasury Bonds is not stimulus.  It's a closed loop.  None of the money has made it out into the larger economy.  Therefore no stimulus.  For the rest of us, the past 6 years-heck, 20 years-have been deflationary with regard to our income and inflationary in terms of our costs.  So nobody's spending money.  If you count paying off existing debt as "saving," then yes, we're turning into savers.  Because we don't have a choice.

BeerMe's picture

Umm...Keynes firstly promotes defecit spending.  The U.S. is doing that.  The recycling money part is the U.S. putting forth wage and price controls without having to say it.  So yes the U.S. is a Keynesian Knightmare.

novictim's picture

Have another beer...and lay off the economics.  Deficits do not equal Keynesian policy.  "Keynesian" does not equal deficits.  

In no way does the current economic program of the past 3 decades equate to a Keynesian approach.  Trust me on this.  Or you will continue to be a fool and patsy for the Trickle-Down, Supply side, Free Market globalists who ARE the ones actually driving this bus.

dizzyfingers's picture

Not paying bills, car/school loans and mortgage, so "saving"?

I'm using only one credit card and that only for food, no fripperies.

BeerMe's picture

The sad part is saving would be making the economy stronger without Fed and government interference.  People and business that have actual money on hand will eventually invest/purchase bigger items (e.g. building improvements, vehicles, industrial machines, etc). 

Saving is always the beginning of building wealth.  You will never get ahead when all your money goes towards bill payments every month.  And now the Fed has made it so most will never get ahead.

DOGGONE's picture

Look at third chart here
http://patrick.net/forum/?p=1230886
OBVIOUSLY we the people should be saving MUCH MORE dollars than we have been for a LONG time!

CHX's picture

Wake me once 64% are saving gold, though it won't take that many... (China and India are already more than enough, actually).

I Write Code's picture

"enjoy"?

I think what they got is people who "enjoy" buying ten dollar bills for nine dollars each, along with the classic Blondie who comes home with a stack of new clothes all bought on sale because she "saves" so much, and people "saving" money so they can pay their electric bills.

 

Ariadne's picture

With all the stores closing all thats left is saving and stealing.

I have invented a can opener for gas tanks, to bypass the locks and the 50+% state & fed pump tax. Fun for pyros.

XRAYD's picture

I would "like" saving money, if I had any left after I pay my bills, and pay minimum balanced off on credit cards.  In the meantime, I "like" it only only on Facebook!

No Quarter's picture

 I won't be hiring any more staff this year or making any new, significant purchases of tools or equipment.  Most all needed capital purchases and staff upgrades were made in 2013 and the very begining of this year. All spending was based on what will generate new/more revenue and/or efficiemcy and in-cash. Really the kinds of legitimate things credit, if used, should go towards, but i digress.. Couldn't imagine anyone leveraging up these days.  Outside of that i'm not spending anything.  Lots of business owners i know, esp those in the same industry, are of similar mind. Spare funds are going into things that hold some real/intrinsic value. The idea of traditional savings seems absurd. Gold and Silver are a good repository. Other than that, what instrument do you use to  "save"  ?

Spungo's picture

People prefer to spend money when they think more money is easily obtained through work or whatever. People prefer to save money when their thoughts are dominated by uncertainty and fear.

No Quarter's picture

And there you hit it right on the head. Why would anyone spend if they can't see at least a sustainable return from expenses (excluding neccesities naturally)?  The thing i just do NOT understand is the propensity for frivolous purchases that don't serve some useful purpose and have a significant depreciating tendancy from the moment purchased. Worse, the tendancy to put things on credit just to have it today. My Dad always told me that anything worth buying was worth waiting until i can afford to pay for it out-right. He also taught me to buy the best quality i could reasonably afford.  My wife on the other hand really thinks is ok to buy shit on credit since you can budget around it. Such bullshit i can't fathom. Where do you learn that?

cro_maat's picture

MSM, Common Core, Celebrity Lifestyles, credit card advertising, sheeple without a clue - Hell I think they give you a Debt for Life guide with every Flu Shot.

Kirk2NCC1701's picture

In hindsight, Keynes was a fraud.  The Banksters loved him, because they saw the potential of their wealth in his "theories".

novictim's picture

Enough with the idiocy here. The revisionism and the delusion...oh my head hurts! Check out our greatest KEYNESIAN president, FDR, on YOUTUBE:

I welcome the hate of bankers
-- FDR Speech
https://www.youtube.com/watch?v=D9yoZHs6PsU

There has not been a Keynesian policy in Washington since the late 1960s. (IDIOTS!)

Latitude25's picture

If hyperinflation comes it has historically been better to be leveraged to the max.

U4 eee aaa's picture

Imagine if these idiot Keynesians raised the interest rates? Then all the responsible people who know how to handle money would have more disposable income. Do you think the phuds in the Fed could ever get around to figure something like that out?

novictim's picture

That would be very interesting if they did as there are no Keynesians in a position to change rates or anything else for that matter.

You must have time shifted from 1955.

devo's picture

You have to save everything just to afford utilities. Spending isn't even an option. Duh. Anyone but PHDs would know this.

novictim's picture

Here is a Bruce Bartlett peice to confound you folks who insist (strangely) that the USA is following Keynesian economics...and of course the last time it did follow Keynesian policy was >30 years ago.

http://economix.blogs.nytimes.com/2013/05/14/keynes-and-keynesianism/?_p...

"...The irony, of course, is that Keynesian economics, which had dominated macroeconomic thinking since the war, was already dying. For decades it had been under intellectual assault by economists associated with the University of Chicago known as “monetarists.” Their most well-known spokesman was Milton Friedman, who argued against the Keynesians’ focus on fiscal policy – federal spending and taxing policy – and their inattention to monetary policy, which is conducted by the Federal Reserve.

As it happens, Friedman had said in 1965 that “we’re all Keynesians now” in the Dec. 31 issue of Time magazine. He later complained that his quote had been taken out of context. His full statement was, “In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.” Friedman said the second half of his quote was as important as the first half.

But it wasn’t only those on the right, such as Friedman, who were abandoning Keynes; so were those on the left such as the Harvard economist John Kenneth Galbraith, an early and energetic supporter of Keynesian economics. In July 1971, he said that Keynes was obsolete because big business and big labor so controlled the economy that Keynesian economics didn’t work.

Galbraith said that it was “sad that Mr. Nixon has proclaimed himself a Keynesian at the very moment in history when Keynes has become obsolete.”

By 1976, it was common to hear world leaders denigrate Keynesian economics as primarily responsible for the problem of inflation. That year, Prime Minister James Callaghan of Britain, leader of the left-wing Labor Party, gave a speech to a party conference that repudiated the core Keynesian idea of a countercyclical fiscal policy. It only worked, he said, by injecting higher doses of inflation that eventually led to higher unemployment.

The following year, Chancellor Helmut Schmidt, of West Germany’s left-wing Social Democratic Party, likewise repudiated Keynesian economics. The German economy, he said, had avoided inflation by resisting the temptation to implement countercyclical fiscal policies during economic downturns. “The time for Keynesian economics is past,” Mr. Schmidt explained, “because the problem of the world today is inflation.”

On his blog last week, Paul Krugman took me to task for misconstruing the generality of Keynesian theory. My point was that policy makers in the early postwar era routinely accepted the idea that Keynesian stimulus was justified whenever the economy wasn’t doing as well as they wanted.

I acknowledge that this view derived mainly from economists who called themselves Keynesians rather than Keynes himself. He was, in fact, a strong opponent of inflation who would have opposed many “Keynesian policies” of the 1950s and 1960s, which contributed to the problem of stagflation in the 1970s that ultimately discredited those policies.

Economists and policy makers mostly forgot that Keynes prescribed budget surpluses during economic upswings to offset the deficits that he correctly advocated during downturns. In his 1940 book, “How to Pay for the War,” he advocated balancing the budget over the business cycle...."

Catullus's picture

The bullshit of this whitewashing of Keynes is that it does site a single page from his magnum opus -- The General Theory. So who gives a fuck about what he wrote before his seminal work when the economics profession was dominated by people who actually had a brain. Even his writings in the 1920s were completely unoriginal. But given that he could read German, he had no idea.

His 1940 musings were in complete contradiction of what he was actually advising the British government to do at the time. That makes him at best a self-serving jerk.

But look at this article written by a monetarist at the Fed and this obscure article from 1940 about how Keynes didn't actually advocate inflation

wstrub's picture

If they start to devalue the currency, people will be scared into spending for fear that it will be devalued again.