An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Monday, March 16, 2009
Ideologues tell you to save, then allow your savings to collapse
LAST YEAR THE AMERICAN PUBLIC LOST AN UNPRECEDENTED, $11 TRILLION IN SAVINGS!
How often do we hear ideologues (mostly on the conservative right) tell us that we have to save more as a nation? How many times do we have to hear Larry Kudlow and other infamous “supply-side” propagandists lecture us that we must “incentivize” savings via policy?
There have been two major policies designed to get us to save: government subsidy of home ownership (largest saving vehicle of most households) and tax policy favorable to stock market investing (second biggest asset holding).
In 2008 households lost more than $11 trillion in net worth mostly because those assets collapsed.
And what did those same ideologues have to say?
They scolded us for buying homes. They said let asset prices fall; that the market would sort it all out. They deployed trillions to try to get us to borrow more. And, yes, they told us to save!
where did said trillions deployed come from ? private, public debt offerrings, china, europe, all-of-the above?
ReplyDeleteCredits to the banking system. That's how the gov't spends and that's what the Fed does when it buys securities (or anything) from the public.
ReplyDelete