04 October 2022

Some basic economic realities people tend to ignore

When inflation was running at about 2-3% and CD rates were about 1.25%, it took no genius to realize that "parking money" was on a fee basis, and savings was disincentivized. I for one don't see this as a primarily political issue. It's just the way the late-stage capitalist economy works, and it's transnational. So now inflation in the US is something like 8% (or higher), and savings rates are maybe 3%. It takes no genius to see that savings are more disincentivized, and, in fact, debt and deficit spending, and not just by governments, is being canceled by stealing savings, which in effect transfers money from the future to the present. Well, well. Hardly surprising. People always think if you spend money you don't have it's just magic, but money isn't real. Goods and services are real, human behavior is real. All we can really do is influence behavior now to try to get people to do things to relieve economic stress. The natural gas crisis in Europe is an example. Governments can't create gas by fixing prices. If there's less gas, there's less gas. But they can use industrial policy to accelerate and incentivize new sourcing, rather than just let the marketplace allocate the shortage and let higher prices incentivize new sourcing. My point is that we need to remember that wealth has to come from somewhere, it's not just rates and prices that can be manipulated by policy. And that somewhere is human effort and natural resources, which can only be influenced so much by policy. 

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