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>aside from hoarding canned food That's not true. A lot of non financial assets can last years or even decades: Cars, houses, renovations, factories, inventor
by BenoitEssiambre 7y ago
>aside from hoarding canned food
That's not true. A lot of non financial assets can last years or even decades:
Cars, houses, renovations, factories, inventory, household supplies (toilet paper, razor blades etc.), clothes, tools, durable goods, washing machines, stoves, furniture, some commodities (processed metals, wood, sand, gravel etc), building materials, public infrastructure, education, some food items (salt, sugar, rice, pasta ...).
If you know that the ratio of workers to consumers is dropping, it might make sense to promote investment in these things before workers become too scarce. Incidentally, low or negative interest rates promotes investment in these things.
Buying these things is a way for people to save and consume at the same time. During a recession, promoting spending in these categories is probably a good way to boost GDP without pushing people to draw down their savings too much. They can instead go from financial savings to physical savings.
- viburnum 7y agoThanks, that's related to the point I was making, that it's completely normal for long-lived assets to have a negative rate of return (depreciation).
- elliekelly 7y ago> Buying these things is a way for people to save and consume at the same time. This is the myth that Baby Boomers have been fed. They've been told their home is worth $X but when they're ready to retire and the next generation can't afford to buy it they're going to suddenly be without the savings they've been banking on and we're all going to be in a boatload of trouble.
- BenoitEssiambre 7y agoIt doesn't have to have positive returns to be considered a saving. You buy a house, you get to live there rent free for decades even if you can't sell it for much at the end. That's still worth a lot.
- elliekelly 7y agoI'm not really clear how it's rent free when you're making monthly mortgage payments? That seems rent free in name only.
- BenoitEssiambre 7y agoWe're talking about buying a house as a form of saving vs buying other financial assets. The part that you borrow is not savings. Only your home equity is savings. The part that the bank owns is not savings to you.
- deleted 7y ago[deleted]