Happy(?) America Saves week
Posted on February 26th, 2008 – 2:43 PMBy Kara McGuire
We have a week for everything in this country, don’t we? America Saves Week aims to: “increase awareness that people need to save money, reduce debt and build wealth,” according to the America Saves Week web site.
Can’t say I know of anyone blissfully unaware of those issues, especially these days.
Anyway, in addition to savings calculators, the site also has a list of savings tips. Submit your own and you could win a $50 EE Savings Bond. It’s not much, but have you heard that every little bit adds up?
The sponsors held a conference call yesterday during which an earnest group of government and nonprofit leaders involved in the campaign talked about the importance of saving.
Now don’t get me wrong (here’s my disclaimer before my mini-rant), I’m a huge believer in the need for people to start saving already and am glad that the issue is getting a lot of attention. But I’m frustrated. Study after study comes out beating the retirement shortfall drum. Yet the stats and the solutions fail to sink in.
Some of it, of course, comes down to money. Not everyone makes enough to afford to live well, let alone save. But some of it is systemic and societal. When a reporter on the conference call asked the officials what they thought of the stimulus package and the message it sends from an indebted nation to indebted citizens, my ears perked up (yes, I admit I was looking at the best dressed Oscar pics).
Boy, did this group dodge that question like an actress trying to avoid Joan Rivers on the red carpet. Most were silent. A couple trotted out the typical, start saving early, teach kids about money lines. Another brushed off stimulus as an issue economists are best left to worry about.
I’m no economist, but I am worried– that these oh-so-trendy, dime-a-dozen financial literacy and savings efforts are failing to inspire those that need it most. And we’ll all pay in the long run.
Anyone have any bright ideas?
3 Responses to "Happy(?) America Saves week"
“America Saves Week aims to:
Savings is all about supply and demand. As the price of savings goes up, people save more. At the same time, as the costs of borrowing go down, people borrow more.
We’ve gotten ourselves into a situation where many have borrowed more than they can afford to repay, but raising interest rates would make the situation even worse. The government’s current solution is to keep interest rates down in an attempt to encourage even more borrowing.
If this sounds like a house of cards, it is. Artificially low interest rates are inflationary, and if Americans don’t want to save for themselves or balance the government’s budget, they will pay for it through inflation, yet another incentive to spend now rather than save for later, particularly when real interest rates are negative.
Eventually, the situation will resolve itself. Either inflation will become too much to bear, or interest rates will go up to the point of choking the economy. We will have to repay our creditors for our monetary transgressions.
In answer to your question, the best answer to increasing savings is to increase interest rates. It won’t be pleasant, but it’s a lot more fun than inflation. Government officials don’t want to admit to this because it’s not very political to deliver the bad news.
Thanks,
-Ryan
Fantasy answer from a government official:
“I think the stimulus package sends a horrible message to the public. If we want people to start saving and get out of debt, the first thing we should try to do as national leaders is lead by example. We shouldn’t spend what we don’t have. We should balance our nation’s budget. We should add to our reserves. Instead we’re doing the direct opposite, like a consumer taking out a home equity loan to go on vacation.”
“If instead we led by example, the number one lesson out of the process would be that yes, it’s painful, but it’s worth it. Nothing worth having ever comes without sacrifice. In this case, it would be the collective sacrifice of the nation. But isn’t the long term security - both physical and financial - worth that sacrifice? Aren’t our kids and grandkids worth that sacrifice?”
The unfortunate answer out of the baby boomer generation (”me, me, me”) and their elected leaders is a resounding “No”. Pity.
