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I hope individuals and businesses start saving again. When I was a kid, everyone saved money. We spent it too, but we all saved for rainy days. Maybe that idea

by _wldu 6y ago

I hope individuals and businesses start saving again. When I was a kid, everyone saved money. We spent it too, but we all saved for rainy days. Maybe that idea will make a come back now. Be prepared. You never know what may happen.

karatestomp 6y ago
I agree, but if they do we're in for a looooong recovery. If we're not already.
- _wldu 6y ago
  Yes. We should not go over board. Keep spending and supporting local businesses, but save some too. Say 15% of your earnings. Put it in the bank. I remember when my wife tried to get a credit card right after we got married. She could not get one. Back then, there was only Visa and Mastercard. Then Discover card came out and she was able to get one with a very low limit. She used that to build her credit over the years. Today, the grand kids get card offers in the mail several times a month. We need to be somewhere in the middle and not at either extreme.
komali2 6y ago
Were you a kid during the last period of wages rising lock-step with value? I.e., before the 1970s?
icarus_camp 6y ago
There is no incentive (for businesses) with bailouts though. You can't buy out your competitor during a downturn because the government bailout to your competitor is already in the mail. We don't see the airlines that saved for a rainy day going out and buying out the ones that have no cash reserve, because the latter were bailed out. So then the industry as a whole decides not to save because they know the bailout will be there. We need some kind of law where if you take a bailout you give the Fed a controlling interest, you have something like 60 or 90 days to buy that interest back by repaying the bailout. After that other entities have the right to purchase that controlling interest and then they now own you.
pjc50 6y ago
All savings are someone else's debt, as a matter of accounting definition. In some ways we are seeing a "savings glut", which is why interest rates are so low, but those savings are overwhelmingly from the minority of mega-rich. If the public start saving en masse, and not in equity but just banking, interest rates will have to go negative, at which point people will really question why they should be doing it.
runT1ME 6y ago
The tax code actively discourages savings for a corporation. If a company wants to make 5% on a relatively safe investment, they have to pay the corporate tax rate first, then invest the money. If instead they calculate a business expansion can bring them 5%, they can hire new employees/buy a business and not pay that tax and still get the 5%.

by _wldu 6y ago

karatestomp 6y ago

I agree, but if they do we're in for a looooong recovery. If we're not already.

_wldu 6y ago
Yes. We should not go over board. Keep spending and supporting local businesses, but save some too. Say 15% of your earnings. Put it in the bank. I remember when my wife tried to get a credit card right after we got married. She could not get one. Back then, there was only Visa and Mastercard. Then Discover card came out and she was able to get one with a very low limit. She used that to build her credit over the years. Today, the grand kids get card offers in the mail several times a month. We need to be somewhere in the middle and not at either extreme.

komali2 6y ago

Were you a kid during the last period of wages rising lock-step with value? I.e., before the 1970s?

icarus_camp 6y ago

There is no incentive (for businesses) with bailouts though. You can't buy out your competitor during a downturn because the government bailout to your competitor is already in the mail. We don't see the airlines that saved for a rainy day going out and buying out the ones that have no cash reserve, because the latter were bailed out. So then the industry as a whole decides not to save because they know the bailout will be there. We need some kind of law where if you take a bailout you give the Fed a controlling interest, you have something like 60 or 90 days to buy that interest back by repaying the bailout. After that other entities have the right to purchase that controlling interest and then they now own you.

pjc50 6y ago

All savings are someone else's debt, as a matter of accounting definition. In some ways we are seeing a "savings glut", which is why interest rates are so low, but those savings are overwhelmingly from the minority of mega-rich. If the public start saving en masse, and not in equity but just banking, interest rates will have to go negative, at which point people will really question why they should be doing it.

runT1ME 6y ago

The tax code actively discourages savings for a corporation. If a company wants to make 5% on a relatively safe investment, they have to pay the corporate tax rate first, then invest the money. If instead they calculate a business expansion can bring them 5%, they can hire new employees/buy a business and not pay that tax and still get the 5%.