47% of American Households Have No Savings
March 24th, 2015Via: Business Insider:
This could be the scariest chart in the world, from Deutsche Bank’s Torsten Sløk. Nearly half of American households don’t save any of their money.
If it isn’t obvious, this has a broad range of implications. People who don’t save won’t have any buffer should the economy turn and they lose their jobs. Longer term, people who don’t save won’t have the capacity to retire.
Even if you have savings, it’s a losing game. While inflation always steals from savers, it really does its dirty work when the central bank and government conspire to create a condition of pervasive and unavoidable negative real interest rates — you literally cannot save money without paying a penalty. The gubmint forces people to accept an inflation rate that is higher than either their income growth and/or the market’s safe rate of return.
So, your capital is rapidly losing purchasing power. Negative real interest rates transfer money FROM every saver TO every over-extended borrower. This is especially true with the gubmint (largely because of its special revolving door relationship with the Fed, which both issues the money out of thin air and then buys gubmint debt, forcing rates into negative territory). That’s what the gubmint needs to stealthily take your wealth to pay down the prior debts it accumulated.
So, “negative real rates” are THE essential component of transferring wealth from the many to the few, with the “few” being defined as the gubmint, Wall Street, and others who exploit leverage and liabilities at sufficient scale to be on the right side of that wealth transfer.
This is the practice of gubmints and central banks everywhere.
Read the abstract of this 2011 BIS working paper, where the above scam is termed “financial repression”:
http://www.imf.org/external/np/seminars/eng/2011/res2/pdf/crbs.pdf
I don’t know if so much knowledge has ever been conveyed in so few words on Cryptogon, but I hope everyone reading understands the comment above.
@Pookie Thank you.
I don’t have anything to add to Pookie’s very complete and concise summary of “financial repression” but for the reasons explained above I don’t necessarily see the lack of savings as a complete negative.
If you can find something else to transfer your savings to you can at least partially escape from this scam. If you take some money out of the bank and buy solar panels or seeds or tools you may technically have less savings, but it’s just possible you’ll survive (or at least stop feeding the beast).
@alvinroast Yeah, it’s best to be out of the corrupted system (don’t feed the beast), due to the very real risk of bail-ins (legislation to facilitate same rammed into place last year in many countries, including the USSA and my own non-USSA backwater). The mega-wealthy are still scrambling into ultra-high-end RE, fine art and antiques, farmland/food production, and PMs outside of their home jurisdictions. Moi? I’m planting fruit and nut trees this winter. Gotta get me some walnut and filbert trees thriving, and I’m finally getting a solar setup in the works.
Great discussion. Pookie nailed it. Alvinroast, agreed about alternatives — essentially hard assets that can actually be used, some of which can be sold (or bartered) down the line sometime. Eggs in many baskets if at all possible. Fiat currencies should be the last place anyone stores extra money, except just enough to get by in case of a bank holiday or some unknown disruption to the beast system.
Just now:
http://finance.yahoo.com/news/munger-says-prepare-harder-world-185025204.html
“You can count on the purchasing power of money to go down over time. And you can almost count that you’ll have more trouble in the next 50 years than the last.”