But the government does this on the purpose and in inflationary scenarios, it is they that make off with all that “evaporated wealth”. They want you to spend, after all.
Aggregate savings is higher than it has ever been, but we don’t think of wealth accumulation among the obscenely wealthy as “savings” in the same context as we do our personal savings. This is largely due to some very well co-ordinated propaganda that conflates “business” with the uber-wealthy. When one states, correctly, that Jeff Bezos makes as much per minute ($150,000), 24/7, as the average worker makes in a year and a half it is seen as a criticism of the American system, mom, and apple pie and will elicit attacks ranging from accusations of being a communist to death threats.
If you want to measure the aggregate savings in America it is very easy to do. Simply ask anyone what the national debt is and you will have your answer. I fully understand how that is counter to anything you are told by politicians and the media that are in perpetual hair on fire mode over the debt, but it is factually accurate. The government must spend before it can collect taxes because it is the monopoly issuer of our currency, so it creates new money for “ALL” spending and simply deletes any that it collects back in any taxes or fees. There is literally no operation in our system that allows tax revenue to be recycled to new spending.
Because our system was designed around defending a gold reserve it was also advantageous for the government not to hold any money that could be converted to gold and money only exists in the private sector. The US Treasury bond is the vehicle that represents all but a small portion of any difference between spending and dollars collected/deleted by taxation. Unlike other bonds, they don’t represent revenue for the government that needs no revenue source, but simply money sequestered from the economy for a set period of time.
The monopoly issuer of the currency cannot increase its money supply by borrowing anyway, as it would have to create the currency to make it available to borrow. Since leaving the gold standard domestically in ’34 Treasury bonds are little more than welfare for the banks and already wealthy, paying interest on money government creates. One simply has to be wealthy enough to deal in the rarified atmosphere of high finance to collect it.
With all public money captured in bonds, the only source of money to the general economy is bank debt. Banks don’t actually create “net” money, but they do create currency to match every loan on their books to enable interbank transfers of those loans. The issue with this system is that the currency created by banks can never “net” retire the debt that made it or be “net” saved. It can move through the economy between winners and losers, allowing the purchase of necessities and luxuries according to individual earnings, but only money created by Congress can balance it to zero in the macroeconomy.
This presents a dilemma when Congress is focussed on taxing for “revenue” and spending as little as possible and anyone suggesting that we spend more in deficit is ridiculed as a pinko commie socialist. Our current approach to spending, mostly mired in gold standard thinking and fear mongering myths, can only be a race to the bottom that starves the economy while allowing extreme wealth accumulation for a very few individuals. We are saving more than we ever have, but that is horribly distributed. Any budget that doesn’t compensate for trade deficits and wealth accumulation with deficit spending will only make this worse going forward. Any misery in this economy needs to be understood as a political decision, not economics.
