6 ms·

This but without the /s.

m00dy 5y ago
This is not my first time that I hear about this. Two of my danish friends told me exactly the same without /s :). Why shouldn't I have savings ?
- lifty 5y ago
  Savings are a drag on the economy. It’s negative aggregate demand and we can’t have that. While I don’t have any proof, I have a feeling that the negative rates environment is making people even more scared of spending money.
  - gruez 5y ago
    It's hard to tell whether something's sarcastic or sincere in this thread, but on the off chance that you are sincere: >Savings are a drag on the economy Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital.
    - lifty 5y ago
      My previous statement is not sarcastic but should also not be taken as fact. It’s more like theory and I doubt we know how far it strays from reality. Yes savings get invested but not all money flows are equal. For example, stock buybacks might have a lesser impact on economic velocity compared to consumption spending.
    - RobertoG 5y ago
      >"Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital. " No they don't. Savings is only a number in a computer and lending is not limited to the available savings because private banks create money when lending. So, the quantity of savings have not effect in how much financial capital can be invested in the economy. Private banks don't lend reserves (or savings), instead, they lend when makes business sense and then search for reserves in the system. Central banks will accommodate any need of reserves in the system in order to keep the interest rate in their choose range. Edit: I see I get some down-votes, maybe people is more willing to believe 'forbes' or the Bank of England that some random guy in the internet: https://www.forbes.com/sites/francescoppola/2014/01/21/banks-dont-lend-out-reserves/ https://www.forbes.com/sites/francescoppola/2014/01/21/banks... https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
      - csomar 5y ago
        > Central banks will accommodate any need of reserves in the system in order to keep the interest rate in their choose range. I think they are required to keep 10% reserve. Unless this changed very recently?
        RobertoG 5y ago
        It has not changed, the problem is that the normal narrative has the causality wrong. The explanation we get is this: private banks have a quantity of reserves and they can lend only what the money multiplier allows them. So, they are limited by the quantity of reserves they have. If that were true, they would be limited by the quantity of savings in the system. But in reality it works the other way around. Banks lend first (hopefully only when makes business sense to lend) and then they search for reserves. A bank lend (creating money in the process) and, after the fact, if it doesn't have enough reserves already, it tries to get the reserves from other banks (inter-bank market). This is a legal requirement, so, they have to get those reserves. This creates an offer-demand dynamic between banks that move the interest rate up or down. If the quantity of reserves was fixed, that would be the end of it, but, because Central Banks have a target interest rate that they want to keep (but not a money quantity target), they have to accommodate the quantity or reserves in the system reacting to the inter-bank market dynamics. Adding or retiring reserves as necessary to keep the interest rate that they want. The central banks control the interest rate, but that means they can't control the quantity of money in the system. The quantity of money is determined by the demand of credit from the economy (and not by the available savings). If we understand this, we see that private banks are not limited by savings in their lending capacity, they are limited by how many business or households are requesting credit (and if those request make business sense for the bank). This is a good reading about those subjects: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
        csomar 5y ago
        Thanks. This makes sense of what you said before. (I'd not focus on the downvotes too much, money issues are too emotional/political).
    - imtringued 5y ago
      >Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital. The problem with the US economy is that a big part of the savings do no such thing, Biden's infrastructure bill is just a scheme to tap into those excess savings and let the government become the investor of last resort.
  - imtringued 5y ago
    Not all savings are created equal. Savings can be invested, the problem is with savings that nobody invests. Excess savings are a drag on the economy because they fail to employ anyone, nor do they result in productive work (borrowing money for dividends or stock buybacks is not productive, just a shell game).
- rawtxapp 5y ago
  You need to be a slave to the system, always chasing the next shiny thing, who will bankroll useless material consumption otherwise? People don't save for rainy days and when things go south, everything collapses and the system is too fragile.
  - bildung 5y ago
    People in Denmark collectively save for rainy days, which is a pretty efficient solution.
  - imtringued 5y ago
    You got it backwards, nobody should be a slave to the system. Consumption doesn't have to be useless material consumption, you can consume responsibly the same way you can do anything in life irresponsibly or responsibly. For example, planting a tree is consumption, building a house is consumption, capturing CO2 is consumption.
    - rawtxapp 5y ago
      I already have everything I need, what should I consume next? Those examples are not consumption, they are investments for the future and are arguably a net positive and a saving's mechanism by themselves (saving the planet, your living condition, etc).
- 0xfaded 5y ago
  Because Danes have generous pensions partly funded by foreigners who somewhat reliably leave the country after a number of years.
  - throw0101a 5y ago
    And the foreigners can often use their time in Denmark as contribution credit to their own social security. Canada for example has a few such agreements, include with Denmark AFAICT: * https://www.canada.ca/en/revenue-agency/services/tax/canada-pension-plan-cpp-employment-insurance-ei-rulings/cpp-ei-explained/canada-pension-plan-employment-insurance-explained-13.html https://www.canada.ca/en/revenue-agency/services/tax/canada-... * https://retirehappy.ca/social-security-agreements-cpp-oas/ https://retirehappy.ca/social-security-agreements-cpp-oas/
    - AdrianB1 5y ago
      There may be a few exceptions, but that is not the rule.
  - simongray 5y ago
    You mean all those expats that only have to pay half the income tax that Danes do? If you're only here temporarily as some kind of specialist it's hardly like you're being robbed. If you decide to stay for the long haul, obviously you are expected to also contribute your fair share to the welfare system. https://skat.dk/skat.aspx?oid=2244911 https://skat.dk/skat.aspx?oid=2244911
- DangerousPie 5y ago
  There is nothing wrong with having savings but right now pretty much every government in the world is trying to encourage consumer spending to get the economy going again. And the way they do that is by making the alternative (saving) less attractive.
- imtringued 5y ago
  You should have as many savings as the economy demands, right now it demands very little savings. The best choice would be to increase the demand for savings but that would require consumer spending, which then increases demands for investments which increases demand for savings.
wait_a_minute 5y ago
Nah

This is not my first time that I hear about this. Two of my danish friends told me exactly the same without /s :). Why shouldn't I have savings ?

lifty 5y ago
Savings are a drag on the economy. It’s negative aggregate demand and we can’t have that. While I don’t have any proof, I have a feeling that the negative rates environment is making people even more scared of spending money.
- gruez 5y ago
  It's hard to tell whether something's sarcastic or sincere in this thread, but on the off chance that you are sincere: >Savings are a drag on the economy Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital.
  - lifty 5y ago
    My previous statement is not sarcastic but should also not be taken as fact. It’s more like theory and I doubt we know how far it strays from reality. Yes savings get invested but not all money flows are equal. For example, stock buybacks might have a lesser impact on economic velocity compared to consumption spending.
  - RobertoG 5y ago
    >"Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital. " No they don't. Savings is only a number in a computer and lending is not limited to the available savings because private banks create money when lending. So, the quantity of savings have not effect in how much financial capital can be invested in the economy. Private banks don't lend reserves (or savings), instead, they lend when makes business sense and then search for reserves in the system. Central banks will accommodate any need of reserves in the system in order to keep the interest rate in their choose range. Edit: I see I get some down-votes, maybe people is more willing to believe 'forbes' or the Bank of England that some random guy in the internet: https://www.forbes.com/sites/francescoppola/2014/01/21/banks-dont-lend-out-reserves/ https://www.forbes.com/sites/francescoppola/2014/01/21/banks... https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
    - csomar 5y ago
      > Central banks will accommodate any need of reserves in the system in order to keep the interest rate in their choose range. I think they are required to keep 10% reserve. Unless this changed very recently?
      - RobertoG 5y ago
        It has not changed, the problem is that the normal narrative has the causality wrong. The explanation we get is this: private banks have a quantity of reserves and they can lend only what the money multiplier allows them. So, they are limited by the quantity of reserves they have. If that were true, they would be limited by the quantity of savings in the system. But in reality it works the other way around. Banks lend first (hopefully only when makes business sense to lend) and then they search for reserves. A bank lend (creating money in the process) and, after the fact, if it doesn't have enough reserves already, it tries to get the reserves from other banks (inter-bank market). This is a legal requirement, so, they have to get those reserves. This creates an offer-demand dynamic between banks that move the interest rate up or down. If the quantity of reserves was fixed, that would be the end of it, but, because Central Banks have a target interest rate that they want to keep (but not a money quantity target), they have to accommodate the quantity or reserves in the system reacting to the inter-bank market dynamics. Adding or retiring reserves as necessary to keep the interest rate that they want. The central banks control the interest rate, but that means they can't control the quantity of money in the system. The quantity of money is determined by the demand of credit from the economy (and not by the available savings). If we understand this, we see that private banks are not limited by savings in their lending capacity, they are limited by how many business or households are requesting credit (and if those request make business sense for the bank). This is a good reading about those subjects: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
        csomar 5y ago
        Thanks. This makes sense of what you said before. (I'd not focus on the downvotes too much, money issues are too emotional/political).
  - imtringued 5y ago
    >Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital. The problem with the US economy is that a big part of the savings do no such thing, Biden's infrastructure bill is just a scheme to tap into those excess savings and let the government become the investor of last resort.
- imtringued 5y ago
  Not all savings are created equal. Savings can be invested, the problem is with savings that nobody invests. Excess savings are a drag on the economy because they fail to employ anyone, nor do they result in productive work (borrowing money for dividends or stock buybacks is not productive, just a shell game).
rawtxapp 5y ago
You need to be a slave to the system, always chasing the next shiny thing, who will bankroll useless material consumption otherwise? People don't save for rainy days and when things go south, everything collapses and the system is too fragile.
- bildung 5y ago
  People in Denmark collectively save for rainy days, which is a pretty efficient solution.
- imtringued 5y ago
  You got it backwards, nobody should be a slave to the system. Consumption doesn't have to be useless material consumption, you can consume responsibly the same way you can do anything in life irresponsibly or responsibly. For example, planting a tree is consumption, building a house is consumption, capturing CO2 is consumption.
  - rawtxapp 5y ago
    I already have everything I need, what should I consume next? Those examples are not consumption, they are investments for the future and are arguably a net positive and a saving's mechanism by themselves (saving the planet, your living condition, etc).
0xfaded 5y ago
Because Danes have generous pensions partly funded by foreigners who somewhat reliably leave the country after a number of years.
- throw0101a 5y ago
  And the foreigners can often use their time in Denmark as contribution credit to their own social security. Canada for example has a few such agreements, include with Denmark AFAICT: * https://www.canada.ca/en/revenue-agency/services/tax/canada-pension-plan-cpp-employment-insurance-ei-rulings/cpp-ei-explained/canada-pension-plan-employment-insurance-explained-13.html https://www.canada.ca/en/revenue-agency/services/tax/canada-... * https://retirehappy.ca/social-security-agreements-cpp-oas/ https://retirehappy.ca/social-security-agreements-cpp-oas/
  - AdrianB1 5y ago
    There may be a few exceptions, but that is not the rule.
- simongray 5y ago
  You mean all those expats that only have to pay half the income tax that Danes do? If you're only here temporarily as some kind of specialist it's hardly like you're being robbed. If you decide to stay for the long haul, obviously you are expected to also contribute your fair share to the welfare system. https://skat.dk/skat.aspx?oid=2244911 https://skat.dk/skat.aspx?oid=2244911
DangerousPie 5y ago
There is nothing wrong with having savings but right now pretty much every government in the world is trying to encourage consumer spending to get the economy going again. And the way they do that is by making the alternative (saving) less attractive.
imtringued 5y ago
You should have as many savings as the economy demands, right now it demands very little savings. The best choice would be to increase the demand for savings but that would require consumer spending, which then increases demands for investments which increases demand for savings.

wait_a_minute 5y ago

Nah