Are We Doomed? "Smart" Accounting: "The Optimal Level Of Demand Leakage Is Aggregate Suicide"

   (Commentary posted by Roger Erickson)

Demand Leakage: (when we hoard initiative by sitting on it, rather than investing it)

A situation in which capital, or income, exits an economy, or system, rather than remains within it. .. In a two sector [economics] model, all individual income is sent back to employers when goods and services are purchased, and back to employees through wages and dividends. Leakage occurs when income is taken out through taxes, savings and imports.

So the following message, parroted nearly everywhere, is cringeworthy.

Save More Tomorrow: Using Behavioral Economics To Increase Employee Saving

Save More Tomorrow (hereafter, the SMarT program) involves people who commit in advance to allocating a portion of their future salary increases toward retirement savings. This has been shown to increase retirement plan savings significantly. (hat tip John Lounsbury)

And they have the temerity to call it SMART. I guess some people are just born stupid smart.

Why, by their logic, if we save EVERYTHING, just think how rich we'd be .... and how well off (dead) the next generation would be (since we wouldn't have invested a single penny in their development)!

Weepin' Buddha on a decline! They know not what they do. 

It's not a question of forgiving them, but rather of surviving them.

An electorate is a terrible thing to waste. No wonder some wag named "Smart" retirement savings as Zombie Economics. It's essentially investing in the walking dead.

No wonder every process is too important to be left to the presumed process owners. If we listened too much to professional risk-managers, we'd avoid living.

ps: for those who missed the point;

My rant is not against saving, but against collectively saving too much, as a fallacy of scale.

We already know that that approach alone won't save us. We as a people can't "save" ourselves out of lagging aggregate income, any more than individuals (as an aggregate of cells) can stay in a race by holding their breath and saving oxygen.