[Excel_Wizard]

There is more money saved up than there are good productive investments available for it, in comparison to the past.

This correlates with a few things: - Inflation of the value of investment assets (high P/E ratios) - Low interest rates on bonds - Secular stagnation

[nathan_compton]

That I can believe, but it seems a bit double-speaky to call it a savings glut, right? My untutored intuition tells me that its a glut of savings in a small number of people's hands.

People who don't have a glut of savings, or even significant debt, which is a lot of people, can probably think of a lot of good uses for that money.

Assuming this sketch is accurate, the problem is too much money in the hands of too few. Not a savings glut. To call it such seems like a nakedly political way of avoiding the real issue.

[twic]

The thing that's glutted is the savings themselves - the number of dollar bills that have been scanned in and put in spreadsheets. That the spreadsheets are in the name of a small fraction of the population doesn't change the fact that there is a glut of the dollars.

[nathan_compton]

Pretty sure it does - if you split that "glut" up evenly across the population of, say, earth, I'm pretty sure they would find more than "marginal returns" on its expenditure - perhaps not in the form of literal investments in monetary instruments, though. When its concentrated in the hands of a few, its marginal value is very small. The very wealthy aren't looking to spend that money on like actually useful things like health care or paying off their student debts or housing or education. They want to get returns.

The world would be a better place if that money was in the hands of more people.

If you ask non-wealthy humans, there is plenty of stuff to spend money on. It only looks like a glut if you're a rich person.

[throwaway34241]

A lot of the things you are talking about are spending. I think the savings glut theory is specifically about the demand for saving and loaning money for investments vs spending and borrowing money to invest, and there being a relatively high demand in dollars for the former. If you’re proposing decreasing saving via tax policy (on people with a high propensity to save) and increasing spending via fiscal policy, I think that fits right in.

Aside from wealth inequality increasing net saving (since wealthy people save a higher percent of their income), the trade deficit may also be a factor, since it means overall foreign countries are saving dollars (if they were spending the dollars we pay them on US goods there would be no trade deficit).

Low interest rates are a traditional way to discourage saving and encourage borrowing but interest rates are already quite low (real negative rates are a possibility with some inflation, but it’s questionable if investments that only make sense under negative rates are actually good investments).

[danans]

You and the parent are agreeing with each other.

There is a savings glut, but those savings are in accounts owned by large corporations and very wealthy individuals.

[thu2111]

Can they though? What do you have in mind when you say they can think of good uses for the money?

The savings we are talking about here are really "funds looking for yield", in fact must be because Western monetary policy punishes cash saving through inflation. And finding great investments at scale is definitely hard. I doubt you know lots of people who can do it.

Bear in mind by this definition houses and corporate balances count as "savings".

[nathan_compton]

You're kind of illustrating my point, though - the very language we are using to describe the problem hides the fact that there are a lot of people with a lot of demand for goods and services who can't access them because they don't have savings, and, in fact, have a lot of debt.

The framing of the problem as a "savings glut" reflects this fundamentally wealth and investment oriented way of thinking about economics.