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I am nowhere near as educated as the author about how the macroeconomics work but I wonder if he isn’t short-sighted. I mean that in the sense that currently th
by human 5y ago
I am nowhere near as educated as the author about how the macroeconomics work but I wonder if he isn’t short-sighted. I mean that in the sense that currently there isn’t any lack of depositors and the banks do not rely on money markets. However, we are probably at peak savings right as people are restarting to spend. On top of that, with the level of debt Americans have taken on (mostly mortgages), if the rates rise ever so slightly, they will have to dig into their savings to make ends meet and it might trigger a new cycle. We also should not underestimate what could happen if inflation persists and "inflation mentality" sets in. People will put their cash to use as fast as possible and buy real assets, equities and even supplies. This would further reduce deposits.
- alfiedotwtf 5y agoI think when rates dropped below 4%, people already pulled out of deposits and went into tangible assets. I hink it's going to be a long time before people flock back into long-term savings accounts
- reducesuffering 5y agoOn the contrary, retail deposits are as high as ever. https://mobile.twitter.com/LynAldenContact/status/1455315779377897472/photo/1 https://mobile.twitter.com/LynAldenContact/status/1455315779...
- alfiedotwtf 5y agoTbh I'm quite surprised. Loading up on debt vs deposits sounds like a better alternative in this climate
- human 5y agoThe nice thing is that you can do both! You can up your savings while taking on a bigger than ever mortgage. A real example for someone who earns 50k per year would be to have 20k in a savings account while getting a 500k mortgage. You’d be taking advantage of the system and making more money with your debt than with your savings. That’s assuming inflation on the price of your house at 4-5% while paying 1-2% interest rate.