FDIC – Lets save

In case you thought Shiela Bair understands banking and the monetary system.

All this can do is further reduce aggregate demand.

The entire administration including the Fed and Tsy seems hopelessly mired in gold standard economics.

FOR IMMEDIATE RELEASE
February 22, 2010 Media Contact:
Greg Hernandez (202) 898-6984
Cell: (202) 340-4922
Email: ghernandez@fdic.gov

The Federal Deposit Insurance Corporation (FDIC) is calling upon consumers across the nation during America Saves Week to consider establishing a basic savings account or boosting existing savings. FDIC Chairman Sheila Bair said, “One fundamental lesson of the financial crisis is that savings can help families withstand sudden changes in their economic well being. Establishing a savings account in a federally insured institution is a great first step to build wealth and begin a savings habit that will last a lifetime.”

The personal savings rate rose to 4.6 percent in 2009 from 2.7 percent in 2008, according to the U.S. Department of Commerce. “I am pleased to see that people are saving more of their hard-earned money and building wealth. Having personal savings for an emergency fund or saving for a future expenditure, such as a college education, can make a big difference in avoiding other costly alternatives. I’ve always been a big advocate of a back-to-basics approach to financial services; it’s my hope that Americans’ increase in savings is the beginning of a long-term trend,” Bair said.

“Money saved by consumers also provides a stable source of funding for investments in the economy that benefit all Americans,” said Bair. “In fact, a country with robust savings generally has more capital to fund investments and support economic growth over the long-term. As demonstrated recently, it is harmful to an economy when consumers spend beyond their means, financed by debt that they cannot afford to repay.”

To learn more about America Saves Week and about savings-related resources from the FDIC, please visit http://www.fdic.gov/deposit/deposits/savings.html.

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7 Responses to FDIC – Lets save

  1. Tom Hickey says:

    If savings were really integral to investment, the previous administration would not have been shamelessly promoting consumer debt and been wildly promoting savings instead.

    Reply

  2. warren mosler says:

    a company borrowing to invest ‘creates’ both the asset and the liability

    the bank has the loan to the company as an asset, and another entity has the deposit/’savings’ account at the bank

    Reply

    Jim Baird Reply:

    And the implication is that the causality can’t be reversed, correct? A decision to invest creates, by accounting logic, new savings, but a decision to save does not create new investment.

    Reply

    RSJ Reply:

    One would hope! Who wants to live in a world where someone deciding to save forces another random person to incur a liability. That is what the government is for.

    Reply

  3. warren mosler says:

    yes!
    one of the 7 deadly innocent frauds is that we need savings to have money for investment

    Reply

    Paul M Reply:

    Warren,

    Given that investment leads to savings and not the reverse, do the funds for investment ultimately have to come from government deficits? Meaning private sector credit expansion is simply moving sand in the sandbox? My question comes from thinking about this quote from the 7 Deadly innocent Frauds…

    “This slows the economy and introduces the need for private sector credit expansion and public sector deficit spending just to get us back to even.”

    Reply

  4. Ramanan says:

    Gawd!

    Warren,

    I remember reading somewhere in your website, that they (the economic advisers) mess up the I=S identity and this has led to a lot of bad policies. What are/were these policies ?

    Reply

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