From: Ted Winslow <egwinslow at rogers.com>
Mike Beggs wrote:
> People store value in
> financial assets that are not money - bonds, shares, etc.. So Fitch's
> concept of 'surplus capital hoards' is not meaningless. It is possible for
> savings to flow into financial assets (with only temporary stops as 'money')
> and inflate their value without necessarily having an equal impact on the
> market for real investment goods.
"Saving" is the difference between the total value of output and the value of that part of it that's consumed, i.e it's necessarily (it's an accounting identity) equal to the value of output that isn't consumed.
So it's not possible to have part of "saving" diverted into financial "hoards", i.e. it's not possible to have "saving" equal that part of the value of output that's not consumed plus the change in these "hoards".
[WS:] Pardon my naivete, but what differentiates "savings" from "government deficit spending" or for that matter "government money printing press?" Both denote a certain supply of coupons that can be exchanged for goods or services in the real world, so functionally they seem to be identical, no? The only differences seems psychological: the former has connotation "private" and therefore good in the Amrikan popular mythology, whereas the latter has the connotion of "government" and therefore bad in that mythology.
Stated differently, one can imagine a society in which the need for private saving is eliminaed by government providing collective goods for which people tend to save money (such as housing, education, or retirement.) How would be that different from an economy in which individuals "save" and government "borrows" those savings? The main difference I can see is that the former economy would make it more difficult to accumulate private wealth and thus be more egalitarian - which is a good thing - but that is an altogether different issue.
Wojtek