[obblekk]

This is incredibly well written.

The oil example is very compelling for import substitution. And the covid example is interesting in showing the savings rate only went up as an offset of gov spending.

I'd love to see a follow up on (a) is it important for the US to increase domestic savings and (b) what are the best policies to do so, and why are they the best?

I imagine blanket tariffs might actually increase the savings rate because they increase the cost of importing all goods when the domestic alternatives are either inferior or more expensive. But I'm curious if they are the best way to achieve the savings goal.

[tastyfreeze]

The only policy that will increase savings rate is a stable or depreciating currency. People are incentivized to use an inflationary currency so they can maintain value.

[analog31]

But they can spend it on stocks, with the hope of maintaining or increasing value. Thats savings, right?

[tastyfreeze]

Who doesn't love the value of their savings being built 100% on the speculation of the public perception of made up things?

[trgn]

savings are a thermodynamical impossibility. real wealth decays (livestock will die, the roof over your head will leak, the bushel of corn will rot, ...). savings must be invested for it to have future value.

[BirAdam]

Money was traditionally a way to store value, and not all things decay at a rate that matters. Roman roads still exist. The Parthenon still exists. Roman coins still exist. In any inflationary currency value erodes, and it also encourages the production of less durable goods as time pressure encourages speed of production and not durability.

[immibis]

An underrated fact. The only savings that doesn't decay is someone else's debt, too.

[trgn]

yes thank you, I paraphrased Soddy, and for him debt was virtual wealth (and not subject to decay).

[tastyfreeze]

If only there was some material that didn't degrade over time and is hard to produce. Somebody should invent something like that.

[trgn]

It's circular. Sure it's pegged to metal, but won't tell you how much corn or land or homes you can buy with it. What should one oz of gold, hoarded in 2025, be able to buy you in 2050? Many factors will determine that. Theres no such thing as fixed value, unless the definition is self referential.

The only thing to do is turn present day savings in capital, it's the only claim one can have on wealth in the future.

[analog31]

Its value goes up and down, and is as speculative as anything else.

[BirAdam]

In a perpetually inflationary environment it functions that way. Stocks become a universal savings account. Everyone pouring money in raises values whether or not the company being bought has any real value.

[JackYoustra]

(a) There's an argument that people should save more for retirement, but I haven't heard anything more than that about why domestic savings as a whole has to increase. If anything, this is quite a good place to naturally run a deficit! Good rule of law and investment opportunities, as well as future earnings from migrants.

(b) Targeting the fiscal deficit usually works well, especially because it's particularly yawning right now. Forced savings (sing-style CPF) work ok too though, although only Singaporeans wouldn't consider that a tax.

[_t9ow]

> only Singaporeans wouldn't consider that a tax

Both forced savings and taxes are legally mandated by the government, but that does not mean that forced savings are taxes. Implementation details matter.

Your money in your own CPF account accumulates interest (at decent/attractive interest rates that generally exceed inflation rates), and is then paid out tax-free to you after retirement.

Additionally CPF funds are managed separately from the government's consolidated revenue. They are administered by the CPF Board and are not used for government expenses in its yearly budget.

[JackYoustra]

Sure sure, my point is stuff like British national insurance and American social security are considered taxes, even though much of the money in expectation goes right back to you in retirement / health spending.

In Singapore, the flows are similar, even though the accounts are broken out individually and the top-ups are explicitly done.

In my view, the key is the government telling you what to spend your money on that gives it the shade of taxation. Whether they do so with labeled accounts or not seems more of an implementation detail.

[_t9ow]

> Whether they do so with labeled accounts or not seems more of an implementation detail.

I think this is an implementation detail of huge significance.

In the CPF system, your current contributions pay for your own future retirement. In the Social Security system, your current contributions pay for current retirees' retirement.

The CPF system is sustainable, because it truly is a savings scheme. The U.S. Social Security system is not, because it relies on having a tax base that never diminishes.