Morgan Stanley's Stephen Roach is complaining that "Fed Repression" is punishing savers?! You'll have to excuse me, I must be missing something.
http://www.cnbc.com/id/45065234
Mr. Roach laments that: "one of the big disconnects in the U.S. policy debate right now is a fixation on stimulus packages, the Fed's "unconventional monetary policy," and President Barack Obama's jobs bill at the expense of helping Americans get rid of their increasing debt load so they can save more."
We should be helping Americans get rid of their increasing debt load-as Greece has just taken a major step towards doing with the 50 percent haircut in bond debt the EU negotiated with bondholders-and his recent notion of a national debt forgiveness is just what is needed. But the second part is clearly wrong. The one thing we don't suffer from right now is a lack of saving. To the contrary that's been our whole problem just as Irving Fisher correctly explained is always the problem in deep recessions and depressions, 80 years ago.
"How else are we going to fund economic growth?" he asked "Right now we’re borrowing surplus savings from abroad because we don’t save a nickel at home, and we have to wean ourselves from that."
See this is the very same illusion Keynes argued against 80 years ago as well-that savings can get you out of a deep recession. Americans can't hope to save while so many lack jobs and those who do either have underwater mortgages or are just scraping by-or just not scraping by. Unemployment as we know from James Galbraith is the leading cause of deepening economic inequality and depression of wages. American savings are not going to fund growth. Rather only after sustained growth will more Americans hopefully have something saved. What is needed now is not savings but consumption. When you look at all the hoarding going on seems to me that there's not enough penalizing of savings right now. If there were more there would be higher growth.
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