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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 o

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 1y ago
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 1y ago
  But they can spend it on stocks, with the hope of maintaining or increasing value. Thats savings, right?
  - tastyfreeze 1y ago
    Who doesn't love the value of their savings being built 100% on the speculation of the public perception of made up things?
    - trgn 1y ago
      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.
      - tastyfreeze 1y ago
        If only there was some material that didn't degrade over time and is hard to produce. Somebody should invent something like that.
        analog31 1y ago
        Its value goes up and down, and is as speculative as anything else.
        tastyfreeze 1y ago
        Price does not equal value. One oz today will buy you about the same as 1 oz 100 years ago.
        analog31 1y ago
        Yes, it'll buy you an oz of gold. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-... What does equal value?
        tastyfreeze 1y ago
        Whatever people buy. If you are looking at the dollar value of gold you have to look at what a dollar would buy that year. That is the value. You will find that a similar amount of gold buys the same amount of things throughout time regardless of the dollar price. Another way to say that is that the dollar price of gold is correlated with the cumulative inflation of the dollar0 over time.
        analog31 1y ago
        Thats the inflation adjusted curve, meaning it's what gold can buy relative to what a dollar can buy.
  - BirAdam 1y ago
    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 1y ago
(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 1y ago
  > 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 1y ago
    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 1y ago
      > 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.

tastyfreeze 1y ago

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 1y ago
But they can spend it on stocks, with the hope of maintaining or increasing value. Thats savings, right?
- tastyfreeze 1y ago
  Who doesn't love the value of their savings being built 100% on the speculation of the public perception of made up things?
  - trgn 1y ago
    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.
    - tastyfreeze 1y ago
      If only there was some material that didn't degrade over time and is hard to produce. Somebody should invent something like that.
      - analog31 1y ago
        Its value goes up and down, and is as speculative as anything else.
        tastyfreeze 1y ago
        Price does not equal value. One oz today will buy you about the same as 1 oz 100 years ago.
        analog31 1y ago
        Yes, it'll buy you an oz of gold. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-... What does equal value?
        tastyfreeze 1y ago
        Whatever people buy. If you are looking at the dollar value of gold you have to look at what a dollar would buy that year. That is the value. You will find that a similar amount of gold buys the same amount of things throughout time regardless of the dollar price. Another way to say that is that the dollar price of gold is correlated with the cumulative inflation of the dollar0 over time.
        analog31 1y ago
        Thats the inflation adjusted curve, meaning it's what gold can buy relative to what a dollar can buy.
- BirAdam 1y ago
  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 1y ago

(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 1y ago
> 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 1y ago
  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 1y ago
    > 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.