[mariodiana]

You're getting hammered for your comment, but you're not wrong. This article is far more political than economic. It's politics is attack the rich; and as for its economics, it's a lot of neo-Keynesian trash.

The article claims that savings by the rich is fueling both consumer debt and government debt, when in fact it's closer to the other way around. Government debt — monetary policies that inflate the money supply via government debt — is fueling profligate consumer spending with cheap consumer credit made available by easy-money policies.

The ignorance here is destructive.

[rsj_hn]

> it's a lot of neo-Keynesian trash.

No, Keynes argued that the rich keep interest rates too high and prevent the poor from taking on debt. For this reason he advocated for low (zero, actually) interest rates and programs to encourage more borrowing. Basically Keynes got everything he wanted and now the present outrage is that debt is too high and the poor are allowed to borrow whereas before they were prevented from doing it. In fact the long march of history consisted of a sequence of credit easing measures, even including government guarantees, in order to extend credit market access to virtually everyone, with things like underwriting standards deemed to be racist and in need of weakening. The end result is almost everyone can borrow today and at historically low rates which leads to, surprise, a situation in which debt levels are historically high. Then that, too, is blamed on "the 1%".

At least Keynes had a sense of history and wasn't walking in the Eternal Now.

[xapata]

The article isn't Keynesian, nor is Keynesianism trash. I do agree that ignorance is destructive.

Take away the word "profligate" from consumer spending and you'll be closer to the truth. Median real wages have been falling for the last 50 years. We need a little tightness in the labor market to change that, and risking some inflation in a period of negligible inflation seems like a wise choice.

[mariodiana]

Perhaps I'm painting with too broad a brush, and if we want to get into a technical argument, I will concede your point; but when I see multiplier effect and savings glut, I don't really need to see much more. The thrust of this is the "market" has failed and more government intervention is the answer. This is the destructive ignorance I'm referring to.

[xapata]

The article was crap, I agree. Keynes would be better characterized by discussing government intervention to address a market failure, rather than saying the market has failed, which has different connotations.

Personally, I disagree with calling government choices an intervention, because the government is a market participant, and both the market and government are embedded in the society which creates them.