[dec0dedab0de]

I've been punished for being defensive and not participating in the fueling of an asset bubble.

Yes, that is exactly it. The economy falls apart if everyone saves too much. Money is an imaginary number designed to facilitate separation of labor, if too many people save and retire early then there won't be enough people working.

FWIW I am the same way, and used to be angry about it, but I have accepted it for what it is. I bought my house 15 years ago at the height of the last housing bubble. I was under water for a while, but I didn't qualify for any of the assistance because I bought a house I could afford. If I had bought a more expensive house, or if I made slightly less money I would have been able to get some money from the government. It was all based on the ratio of income to mortgage payment, which is still kind of annoying.

Only way I could cut my losses in my mind was to pay off the house as quickly as possible, to save money on interest. So now it's paid off, and for the first time since a year after I moved in Zillow has it at a higher price than I paid for it, though just barely.

But back to the point, don't keep your assets in cash, or any one thing for that matter. Index funds, mutual funds, commodities, collectables, anything that is easy to sell and will generally go up in price with inflation. These policies are meant to encourage people with cash to do things with that cash, instead of hoarding it.

[hirvi74]

> The economy falls apart if everyone saves too much.

I have no problem with policies meant to encourage people to do things with their cash, but only if proper social measures are taken to provide safety and well-being for those people if and when unfortunate events strike e.g. encouraging people to not save their money is a little bit more palatable in a country where socialized health care, public transportation, free public education, etc..

In other words, perhaps people wouldn't need to save so much money if more of their basic needs were covered. In my country (USA), not having savings is like playing a game of Russian roulette with one's financial well-being, assuming one is fortunate enough to have enough income to even have savings.

> These policies are meant to encourage people with cash to do things with that cash, instead of hoarding it.

Which cause the rich to get richer, and the poor get poorer.

[betterunix2]

"assuming one is fortunate enough to have enough income to even have savings"

This cannot be overstated enough. In the USA a myth has developed about "personal responsibility" in which people have a choice, they can save for retirement or they can spend their money on other things; we tend to forget that for roughly half the country there is no such choice because just paying for basic living expenses (food, shelter, clothing, and transportation to a job) will leave nothing to save. People bought the myth and allowed defined-benefit pension plans to be replaced by IRAs and 401k plans.

"Which cause the rich to get richer, and the poor get poorer."

The rich should get richer if they are compounding their investment returns over time. The problem is that for more than 40 years America has been in the grip of politicians who have attacked government programs of all kinds, insisting that we cannot afford to pay for anything that benefits the poor while also insisting that we have to cut taxes on the rich (naturally, the tax cuts also benefit those very politicians). The fact that the poor cannot invest (for lack of capital) is not the reason they are getting poorer; they are getting poorer because for decades we have reduced the scale and scope of government programs that benefit the poor (or that benefit everyone equally).

[arcticbull]

> Yes, that is exactly it. The economy falls apart if everyone saves too much. Money is an imaginary number designed to facilitate separation of labor, if too many people save and retire early then there won't be enough people working.

Yes, this I recently learned is called the paradox of thrift. [1]

[1] https://www.investopedia.com/terms/p/paradox-of-thrift.asp

[imtringued]

It's not just the paradox of thrift. The general concept is the paradox of competition. There are macroeconomic statements that always apply but as individuals optimize their local statements they actually end up "deoptimizing" the global statement. Basically a race to the bottom or a continuous form of the prisoners dilemma. In other words, the idea that local decision making will always reach a global optimum, the very foundation of free market economics, isn't even true in theory given our current money system.

See this in the case of Greece vs Germany. Germany is trying to boost exports by cutting back on imports. If Greece would retaliate by following the exact strategy there would be less trade between them overall. Meanwhile if both countries tried to boost imports, then both of them would be better off.

How exactly does Germany do it? The government is simply enacting policies to destroy the bargaining power of labor. Yes, Germany is trying to compete with Greece based on labor costs. It's trying to pass off a questionable economic policy that destabilizes the eurozone as strength because of moral attachments to export industries and saving money while blaming the other side for importing its products and borrowing to pay for them. This is why the eurozone is a failure and every country should have its own currency.

https://en.wikipedia.org/wiki/Paradox_of_competition

[eru]

Yeah, it's not actually real.

The central bank can always just keep printing enough money to keep nominal GDP stable, if they want. No matter how much people want to save.

[arcticbull]

They can’t actually, GDP is a function of supply and velocity. If you increase supply and it’s saved, velocity drops commensurately. This yields no change in nominal GDP.

[eru]

In that case, just keep printing money and buy up all assets in the world.

[arcticbull]

You clearly misunderstand. That's not what you proposed initially. Doing so would also not have an impact on GDP. Everything in moderation, as they say.

[eru]

I said originally that they can print money.

Sorry, that was a bit sloppy. When we say that eg the Fed prints money, we mean that they buy assets with newly created money.

Typically that asset is government debt. But they have been known to buy other stuff as well. And if they run out of government debt to buy, and nominal GDP still hasn't picked up, they can keep buying up the rest of the world.

Just to keep in mind: real GDP = nominal GDP - inflation.

Printing money like isn't expected to do much for real GDP.