The Glade 4.0

Oh, I totally botched that. I have no idea why I did it wrong in my brain. Could be the AC's out, but that's an excuse. Honestly, I just **** that up.

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How does "not saving" suddenly translate into "malinvestment?" That just doesn't make sense, you can't just draw a line on an income percentage and say all money spent after this point is malinvestment. What you're talking about seems to be what happens when people take on debt to spend now, that's not actual demand because it will have to be paid back. But if everyone were to spend 100% of their income it would be perfectly legitimate demand.

X, saving 50% of your income doesn't mean you won't spend from savings at some point, it just means you budget half your income to put in the bank each week and don't count it when planning your budget.

You make it sound as if putting money in saving was equivalent to burning it.

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In time, this too shall pass.

I'm not strawmanning anything, okay the 50% is pretty simplistic but we just got an example of how Taskiss' parents saved up $1.5 million with no past, current, or future plans to ever spend the money. It was then implied that this should be the way everyone lives their lives. They're not saving for an upcoming future expense. They're saving to cover the chance of a catastrophe, and for the let's say 9/10 people that don't suffer said catastrophe, they essentially never spend the money. If their kids then follow the same philosophy they'll have a whole lot more money in savings, but only 1/10 of them in every generation ever end up spending those savings. The amount of demand created by people buying things will always be 50% less than what it would be if noone saved at all.

Sure, if these savings are placed into a bank account then they're not removed from the economy. But putting the money into bank accounts just gives you exactly the same problem that you have if everyone just spends all their income. Those banks will spend/invest it all, and some of them will fail, causing the people who saved their money there to lose everything. That's not intelligent planning for the future. That's just trading one risk of catastrophe (extended job loss) for a different one. (bank failure) To truly save the money without government intervention you have to stick it under your mattress or do something equivalent to that where it can't be lost.

Or, you perform due diligence and look at the bank/investment's stability before investing and watch after investing so you can pull it out before failure.
So, you have money invested working for you, as well as for the economy and you are at much less risk of catastrophic loss. Win. Win.

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

There's also, of course, diversification. Not just having your money saved in several banks, but also in several different investment/savings vehicles. Owning land/property that you can stand to sell when necessary, for instance, in addition to savings accounts, stock investments, etc.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

No one said that savings only have to be for a catastrophe or that everyone needs to do what Ole Ma Taskiss did (to follow in Rynar's footsteps). Taskiss went on to say himself that in his house they bank one income and use it to pay one-time expenses, such as buying appliances.

She's going to pass the money down to her kids, and the assumption is that if they have already been financially responsible with their own money they won't need to put their share into savings like that; they can spend some and make investments with ohers. Furthermore, no one, including Taskiss talking about his mom, is talking about stuffing it in mattresses. It's saved in a bank or invested and therefore can be lent or used to further growth in other areas.

And don't give me this crap about but what if the bank fails? That's why you put it in more than one place.



No, the banks won't spend or invest it all; they need to be able to cover withdrawls. Furthermore, the fact that some banks will fail does not mean it's stupid to put your money in a bank. You can split it among multiple banks, purchase bonds, etc. Furthermore, it doesn't even need to be a bank; it can be other investments, and you have not shown that the risk of bank failure is the same as the risk of job loss.

Then of course there's the fact that if more people were saving, banks would be extending less credit, and would be less likely to fail.

So no, you do not need to "Stuff it in a mattress" to "truly save" it without government intervention. You're just trying to make banks and investing appear vastly more risky than they really are in order to make it seem like there's no way around government intervention.

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

So what? Your logic is ridiculous. If what you are saying is true about savings, then if the economic output of a country was such that it was greater than what it could consume, it would be bad. Because that's what savings is, it's under-consumption. Saving money does not deplete it from being used for capital formation by other ventures which increase their productivity to the point they can return the initial investment plus whatever graduated fee and end up with more productive capacity. If it fails to do so, the lender and borrow wind up destroying wealth, and if they do so enough, their incompetency will remove their ability to do so and the problem fixes itself. This is assuming we don't do ridiculous things like guarantee loans and bailout companies.

When I build a 7th SCV in Starcraft instead of a barracks to start pumping out marines, I'm doing so because it's an investment strategy. I'm saving that 50 minerals from a marine (the marine's ability to perform in combat represents our ultimate goal to use our wealth, consume) so that I can produce minerals at a quicker rate. When the SCV pays for itself by harvesting 50 (actually 56), I have regained my original investment and gain productive capacity as a result. That 50 minerals I couldn't spend while the SCV was paying for itself wasn't "lost". Neither is money sitting in a non-cash on demand account or investment vehicle while it matures. It's just illiquid.



It is the saver's risk to judge where to put his money. If we guarantee the first $100,000 of all deposits, it gives the banks incentive to be reckless. It also makes investors (savers in this case) lazy and not perform due diligence. Who cares where they put it? It's guaranteed! (not really, since we have a fiat currency, but most people wouldn't realize this). To truly saving money you don't have to do any such thing whatsoever. You can invest it by judging the risk versus not doing so. If there are too many risk ventures, they will eventually become less risky or new less risky ones will come into existence because ventures need capital to expand and grow.

If I spend 300 minerals right away building a barracks and 3 marines, I might be able to do a little damage, but if I didn't judge the risk correctly (scout my enemy to see which units he might have), and now I lost the potential productive capacity associated with the 6 SCV's plus time (interest) I could have earned. But, on the same token, if I get attacked by 6 zerglings or 2 zealots right away and was busy building SCV's, the SCV's are going to get raped. I didn't forecast the performance of my investment based on market conditions (my opponents units) and fundamentals (SCV's are not combat worthy units) to make a good investment strategy.

Really, all your little tirade amounts to is the equivalent of an engineering student complaining to his professor that radiative heat transfer and partial differential equations are too complicated. You might as well complain about gravity and curved space time.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

And make the fact that all investment carries risk to be some sort of inequity that we are able to and should correct.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

This is a really insidious assumption that's crept into a lot of people at the moral/value level, and is really scary. This is the reason we're bailing out pensions for airlines time after time after time, and why now we're going to start in on printing money to cover bad State/Federal pensions in the next few years, unless I miss my guess.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

This is the point I was trying to make in my last post.

It's the Keynesian idea that investment (spending) can replace savings.

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Ezekiel 23:19-20 

I think people are so far removed that they don't even understand what their investment vehicles such as savings accounts, retirement accounts and 401k's actually represent.

In general, people are more confused by dollars than they are informed by them.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

It's not "all investment." It really only applies to pensions, stuff that people are dependent on to survive retirement. Assuming Social Security doesn't exist, what is a person who's retirement savings were wiped out due to economic risks and is too old to work going to do? Dig himself a grave and get in it?



It wouldn't be bad for the country. But it would suck for the people in that country. Look at China. They have a very high savings rate because of their culture. In addition, their government essentially forces its citizens into further savings by actively discouraging imports. They've got very high economic growth. But the average Chinese's quality of life is still ****. All that money he's saving can't be spent on improving the quality of his life. He still has to work long hours in **** conditions to make enough to live after dedicating 25% of all income to "savings."

If this person's children follow the same philosophy, their lives will be better because the country is wealthier, but it will still be dragged down by the fact that 25% of all they earn never gets spent on themselves either. Their quality of life is again substantially worse than that of people in other countries making the same income.

The US of course has problems because it's fueling consumption with debt. That's also bad. But I still don't see how an extremely high savings rate benefits the country as a whole. As long as you're not getting into debt to consume, you should be fine.

Investment cannot replace savings, because there is inherent risk. You do not have the right to a return on your investment. You do, however, have the right to your own property which you have saved. Never ever invest what you cannot afford to lose.

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Ezekiel 23:19-20 

X:

That's because China is/was supressing their currency's value by pegging against the dollar to "protect" their essentially fundamentally illiquid investments.

In short, China was exporting their goods for US Treasuries that wont be able to buy any US exports. If they didn't, the value of their wages would dramatically rise as they begin to consume their own output.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

This is really a matter of a solution looking for a problem. The problem of financial security can be solved by thrifty practices, but he doesn't like that solution, so he's imagining up all kinds of problems in order to make the solution he really wants appear to be the only one.

People do this on all kinds of issues. Gun control morons are notorious for it; they start with the assumption we need gun control or bans and then create problems for it to solve (like the "but what if an otherwise responsible citizen ets drunk and shoots up a bar for no apparent reason?"). Battleship-wankers do this constantly (I think we went over that one before). It's a common tactic.

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

Question: Given the state of the economy over the past 15 years, is it better to save or better to pay down debt?

Depending on your savings vehicle the answer for most is that you will get a better ROI (misused but it seems appropriate) by paying down debt.

However, given the economy of the past 3 years how much savings is enough before you can reasonably assume it is safe to start paying down debt? There are people out there who have been on unemployment for literally years now.

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We should all work under the table.

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"...the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart?" -Aleksandr Solzhenitsyn

Why do pensions get a free pass on risk? See, this is exactly what I'm talking about. Pensions are no more "stuff that people are dependent on to survive retirement" than 401ks. Should they be guaranteed by government, and bailed out when they lose value/collapse? How about IRAs?

The only thing that makes pensions different is that it's got a company behind it saying "Hey, we'll take care of you, if we're in good financial shape." But what happens when the company's not? We bail them out with taxpayer dollars. Why? What makes them special?

I'll tell you why we do it, and why "we" consider them special. Because the guys managing the pensions, and the people in HR pushing the pension plans, have managed to delude their employees and beneficiaries, and the public, that they're safe and risk-free. They're not. Anybody who "depends on their pension to survive retirement" has planned poorly and has not saved enough, or diversified enough. They have not thought through their retirement very smartly, and as a result, may have to impinge upon the goodwill of their children, churches, communities, and neighbors to supplement their poorly planned retirement, or, better yet, go back to work if they're able.

Retirement isn't a right. Neither are pensions.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

The only qualification to that is that these people haven't deluded anyone, they've decieved them into thinking the pension is an absolute guarantee. Let's not pussyfoot about; they have played on people's ignorance, and all the "well they should have been more diligent and responsible" does not excuse lying. The same goes for the unions demanding excessive pensions; they have not been honest brokers for their members but have irresponsibly pushed for "more, more" without regard to whether it was realistic, and they have not taken care of their members by educating them about alternatives.

That doesn't mean that we should back pensions up with the government, but we should severely punish those who are negligent in making sure that enough money is there to pay the benefits. We should also treat anyone with a pension as an unpaid creditor of the company and if any money can be clawed back to pay part of the pension, it should be when gross negligence, fraud, or embezzlement has happened.

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

Point of order -

Investment, in a Keynesian sense, is not money put into 401k programs or other savings models. It's about spending on new plants and major equipment. Keynes saw savings as a leakage from the economy.

When you are talking about Keynes, you are talking about macroeconomics. Individual investment into a savings vehicle is a micro concern.

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It feels like all the people who want limited government really just want government limited to Republicans.
---The Daily Show

401ks don't get wiped out. They can lose a lot of value but they don't just disappear like pensions can. What good is a pension if you have to assume you'll get nothing from it?

401k's can and do get wiped out. What do you think 401k's are invested in? Many people invest their 401k money in the company they work for, others invest in other companies. What do you think happens to those 401k's when those companies go bankrupt?

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

I'm afraid you're economic knowledge is insufficient to call a "point of order." In fact, you demonstrate int his very post that you neither understand the source you cite nor the economy itself at a base level.What's your talking about here is infrastructure, facilities, and durable goods investment. However, that's not the only kind of investment in the system; nor, for that matter, is this the only thing Keynes considered investment. Factories, roads, and durable goods only constitute an investment when they produce demonstrable economic gains over the period of use. They must appreciate in terms of productivity and growth, as opposed to simple monetary value. That said, personal investment and speculative investment are still very much investing in the economy. And whatever criticism of Keynes I have might, he was keenly aware of that reality. Investment makes capital, that is money, resources, time, and other productive energies, available to the economy as a whole wherein it would not otherwise be available. So, yes, Keynes would and did consider things like Stock Funds, Index Funds, 401(k)s (although he's a good 40 or 50 years before them), Retirement Accounts, and Savings Accounts as investments. To say otherwise is pure rubbish.There is no separation between micro-economics and macro-economics. I'm not sure who's putting this BULLSHIT into your head, but they are patently wrong. And, the sooner you get past your misguided and flatly WRONG notion that the two fields of study have nothing to do with each other, the better off you'll be. The macro-economy is nothing more than the aggregation of all economic transactions, period. All economics is micro-economics.

I mean, seriously, if you can't see that the current depression was caused by aggregate bad behavior incentivized by other aggregate bad behavior, then you're lost. And since you want to presume to tell people they don't understand Keynes, let's look at his definition of a recession:

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Other than to advocate jobs as the major contribution towards a sound economy, I keep out of these threads for a reason:

All I'm absolutely sure about is that jobs are the major contribution towards a sound economy. The reason I know that is because my job is my major contribution towards my sound economy. I know that is a fact from the top of my head to the tip of my toes. Things that have been good to me in my past I'll share and talk up, but there's no doubt in my entire self about jobs. Things may be bad now, but more jobs will make things better and less will make things worse. Now, the reason I don't talk smack about one economic school of thought over another where it comes to economic theory is that I'm not experienced enough to have an opinion that matters.

SO, when folks I understand haven't a pot to pee in, nor a window to throw it out of if they had, well, when they start taking on someone I understand has been around that block a time or three, I gotta tell you, the thread starts reeking of bullshit.

Just sayin'.

That's not to say everyone should suck Khross's economic crank. Heck, you want to disagree with him about whether there should be a minimum wage or not, well, that's fair game, but throwing down about particulars involved in Keynesian theory? Get real.

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In time, this too shall pass.