It is by the goodness of God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either. — Mark Twain
The assault on saving, by our media, is a common phenomenon. The same media — with fetish of consumerism — takes every chance to launch an assault on the victims! It’s an amazing world we live in now.
The proverbial wisdom has taught us virtues of savings, and warned against the consequences of mindless squandering and waste. But today the timeless, ancient virtue of thrift is once more under attack — with the fake notion that only spenders can save our economy — while doctrine of spending is in fashion.
The fallacy of argument against saving stems from the assumption that savers are merely cash hoarders. The fetish of consumerism thrives on a central theme that often repeats in various forms in the media: In bad economy, savings is a sin and dissaving is a virtue.
Higher savings would normally be good for the economy. But not now, when capital is needed to invest in growth and jobs. The One Percenters put 56 percent of their available cash into savings accounts and money markets in 2012 – that’s up from 24 percent in 2007.– Robert Frank, CNBC
A great way to rally nation’s squanderers is to blame savers for their plight. Waah! The word “normally” struck my eyes. The mere insinuation that a saver has to become a spender when economy is in tailspin is baseless because author doesn’t understand the fact that saving is another form of spending in capital goods. The only difference between spender and saver is that spender wastes capital on consumer goods while saver invests his capital not only to build new businesses but also to create better-paying and more productive jobs. Even if the One percenters put 56 percent of their cash into savings account(even though I doubt that statistics), banks will swiftly lend that money to an entrepreneur who needs capital to offer consumer goods at a cheaper price since he can borrow money at a lower interest rates(law of supply and demand).
Let’s dissect fallacy as its rampant attack on savers intensifies…
In other words, One Percenters used to save less, and invest more. Now they’re “basically stuffing money under the mattress,” said Jim Taylor, vice chairman of Harrison Group. That also means they’re spending less – on everything from traditional luxury to second homes. Fully 82 percent said they would spend more if they had more confidence in the future.
The notion that savings equates to hoarding or stuffing money under the mattress is another fallacy that needs a fact check. During economic downturn consumptive spending and investment decline due to a common fear: consumers stop spending as they fear that price of goods will fall further due to lower demand. On the same token, investors wait on the sideline simply because they have lost their confidence in the future profitability of the business, and overall stock market in general.
I find it so compelling to seek advice from the smartest investor, Mr. Buffett. According to Mr. Buffett, investing is laying out money now to get more money back in the future. This mere assumption of equating less investment with cash hoarding under the mattress depicts a portentous picture. Indeed, savers are on assault simply because they are in minority. And media loves to cater to a growing class of consumers who love to embrace these fallacies to justify their modern day slavery.
And the attack continues…
The same article suggests that wealthy are scared to reveal their wealth due to a growing hatred by those who have made poor choices in their lives. In a free society, achievers ought to be role models for new generation. Yet the assault on savers is so intense that they prefer to remain recluse. This will only create a bigger class of consumerism.
Our beloved media needs a gentle reminder that their relentless attack on savers along with their fetish of consumerism may make us, savers, an extinct species. The media should beware because for their beloved consumers, savers will need to save even more to invest in capital goods to satisfy ever growing beast of consumerism.
Our lust for more has brought financial meltdown in not too distant past, but we don’t learn from history. Well written. Keep up the great work.
Thank you for the kind words.
That would be funny if it weren’t a bit tragic: savers (with money) are selfish and greedy, while spenders are virtuous. Upside-down topsy-turvy world.
Beautiful, 101C! I love your wisdom.
Shilpan,
Great topic and article. This reminded me of a cartoon that my son drew recently and here is the verbiage.
Man says (who holds a $10 bill in his hand): “We must increase interest rates for the bank and brokerage accounts”
Woman says (who holds a $10 bill in her hand): OK, we will increase the rates from 0% to 15%
From a picture of Federal Reserve Building: The Fed says “The interest rate must always be at 0.01%. Banks need to succeed, not people”
Wise words, indeed!
Fed has kept the rate low, but we all will pay the price sooner or later.
We do spend, we will continue to spend on the things we need and at times want. But, the call to save and save for the things we need and want should be heard as well.
great article, just in time for “black fridays’ and “cyber mondays” and whatever the media like to invent during the holidays.
i was thinking about this subject today when the priest at my church urged people to “buy gifts for poor families”; i thought to myself, he should have urged people to stop buying gifts and come up with new ways to help poor families.