The real purpose of saving should be capital formation
Nope. The purpose of saving is saving.
True, it might be nice if it creates lovely new capital things but that’s not the same. The purpose of savings is to have savings.
The real purpose of saving should be capital formation
Nope. The purpose of saving is saving.
True, it might be nice if it creates lovely new capital things but that’s not the same. The purpose of savings is to have savings.
The opinion of someone without any savings?
Odd that he should acknowledge that banks have an important role in capital formation. The mechanism behind it is that banks lend out those savings to others which, if the bank has chosen wisely, results in economic growth. Previously he has never managed to explain why banks want savings deposited with them sufficiently badly enough to pay interest.
Probably because by acknowledging why banks do that would cause his whole house of cards to collapse. At least the idiot has stopped using “quantum” this and that to attempt to hide his ignorance. Need a rather large galaxy to hide that though.
But, according to him, the banks *don’t* lend out deposits – they self-fund all their lending.
So those savings can’t, according to him, create capital.
They just sit in a box and the bank pays you for the privilege of storing your money for you.
We know he thinks the capital should be forming in his grubby hands. It’s constant failure to do so cheers everybody else up.
Another post harping on about ‘the lack of savings being used productively’ (Which translated means being used in a manner which doesn’t meet with his approval. I am sure he has done this video already.
Our savings in this country are not used to fund investment. Those savings are, broadly speaking, held in three ways.
In one form, they’re held in cash, and banks don’t need cash to lend, so the money that people hold in cash in bank accounts and that’s more than £2 trillion in total in the UK at present, doesn’t do anything economically at all.
It helps banks in the case that they go bust because you are providing them with capital, which they can absorb to cover their losses in the event that they fail. But that apart, you are not helping create any further added value in the economy by saving in cash. That’s a matter of fact.
Banks do need deposits to remain solvent, which is a fact acknowledged by almost anyone with a brain. But even were that not the case – why is money earning interest in cash accounts ‘doing nothing economically’ at all. It’s there for crises which with the current administration’s rapacious demands to fund the public sector behemoth come around all too often. It isn’t there for some totalitarian to think – ‘I can use that money better than you can’
The second use of savings at present is to fund speculative activity. Yes, I know you think that your pension fund or your ISA is buying shares, and that supposedly is funding investment, but that’s nonsense. First of all, in most UK pension funds, only about 5% of all sums saved in shares are now located inside the UK economy. The vast majority will be spread across the world, with most being in the USA. That drags more money into its economy than any other around the world. But UK pension funds are terrible at saving in UK shares right now, a fact that is widely acknowledged.
Actually there’s a kernel; of truth hence the idea from both cheeks of the Uniparty Ass that there needs to be a requirement of tax relief that money is invested in British shares. A truly terrible idea. Of course, the reason why the UK Share market is in such a state, which is because the state is manifestly incompetent in almost every aspect of its operation and hates the indigenous British people is not something this highly toxic figure goes near.
And even when money is saved in shares, there is almost no relationship between the purchase of shares and the creation of new investment in the economy because the vast majority of the shares that pension funds buy are what I call “secondhand”. In other words, they were issued centuries ago in some cases, and they are still being traded. They are not there to create new investment.
Is he really stupid enough to actually believe this? Answers on a postcard…
And the third thing that pension funds buy are secondhand properties. They, by and large, don’t create new ones. They, by and large, trade in land, which is already in existence, and buildings which are already in existence.
So there’s no pension funding in new construction? That’s interesting. I won’t even inquire what the rest of the ‘analysis is but my guess is it will involve:
He is just such a tosser. I mean the sheer level of evil he exudes (his truly nauseating post on the ‘Politics of grievance’ has so far evaded Tim’s notice) would defy a Swift.
“Just such a tosser” is sufficient. I think you dignify him with the accusations of evil. I reckon he’s just such a tosser, no more than that. Unlike Torsten Bell he has little real power, and one of the reasons why he’s just such a tosser is that he’s a failure and knows it.
Now Bell, there’s a dangerous character.
Spud is evil all right, but not a threat. A halfwitted loony with a big stick can still be dangerous, but the stupid old fool doesn’t even have a twig.
Not a big stick so much as a bully pulpit, but his sermons are going only to true believers and other communists. Nobody with any sense is going to listen to his pill of old shite.
Unfortunately that doesn’t rule out any politicians.
the vast majority of the shares that pension funds buy are what I call “secondhand”.
Well, of course they are. To quote our host, WTF does he think people who are retired fund their retirement from if not by SELLING what they accumulated through their working life?
But in Spud world there’s only one side to any investment transaction. For example, in past spewings he has stated that owners of pre-IPO shares should not be allowed to sell them. He also stated that they shouldn’t pay dividends, all profits being reinvested for growth. Which I’m sure you’ll agree is just brilliant.. I’d happily invest in anything knowing I’ll never get a single penny back!
There are plenty of companies that choose not to pay dividends. e.g. Microsoft didn’t for their first 20 years as a public company, but I don’t think anyone who bought at IPO complained!
No. You’re not understanding. Pre-IPO I.e not for sale on the secondary market: Ordinary shares etc – he wants rid of the secondary market altogether. You, gen public cannot buy. And Spud’s master plan is that initial investors cannot sell and cannot receive any dividend returns. So there’s only really 3 ways for the investors to finally realise anything (but why would the invest in the first place?): The company buying the shares back.
The company eventually pays dividends (which Spud doesn’t want) or the company winds up and distributes its assets. Or in Spud world the government steps in and nicks it.
In one form, they’re held in cash, and banks don’t need cash to lend, so the money that people hold in cash in bank accounts and that’s more than £2 trillion in total in the UK at present, doesn’t do anything economically at all.
As I suggested in a previous comment: Now all of you go down to your bank & clear out your current accounts & see what happens. That 2 trillion’s not doing anything, is it?
If a bank can just print money to lend how does he think it could ever go bust? Why does he think a bank could just not lend itself the money to cover its debts?
Indeed, if a bank just makes money on its own -as he asserts – why does a bank need to lend in the first place?
Customer deposits are NOT capital, they are the principal LIABILITIES of the banks. This is ‘O’ level economics.
Everyone’s a consumer but not everyone is a producer, and even producers start and end their lives being just consumers.
At the beginning of our lives we live off our parents, but at the end we must live off our savings. That’s why we save: so that we can afford to stay alive once we’ve stopped producing. Other species, which haven’t figured out saving, die as soon as they become incapable of producing, which in their case invariably means being able to feed themselves.
So simple, and yet it just seems to pass Spud by.
In the final analysis, none of us are producers. We all provide services adds value to some resource. We are definitely all consumers.
Other species, which haven’t figured out saving, die as soon as they become incapable of producing
More likely, their teeth are worn down and they can’t chew anymore. They starve to death, even though food is available.
More often they cannot run fast enough to catch prey before their teeth wear out.
Their teeth wore out eating prey.
or can’t run fast enough to avoid being prey to something with sharper teeth.
Didnt Marx call it ‘primitive accumulation: ?
Trouble with his version of the Ind Rev in England, was that banks were already well established. A yokel might save his pennies and ‘go freelance’ but anyone serious about business got a backer or a loan.
Ah, but that’s the purpose of the person whose money it is.
In Murphy’s world, everyone and everything is for the purpose of the State, as directed by Murphy.
Correct.
The real purpose of saving should be capital formation.
Commie dick Murphy is thinking of the collective, not individuals.
Spud has a short memory. It must be nearly a month since there was a rainy day in Ely.
OT but hilarious, from a Speccie article:
[Vannucci’s] rise began in 2023, when he self-published a book which was a very funny no-nonsense assault on the sacred cows of the world of woke. Called Il Mondo al Contrario (The World Upside Down) it became a mega best-seller.
In the book, Vannucci said, among other things: ‘Dear homosexuals, you are not normal. Just accept it.’ He also wrote that the ‘physical features’ of a black female volleyball star born in Italy did not represent ‘italianità’ And that anyone has the right to shoot dead an intruder in their home, that illegal migrants should be deported immediately, and that people should be able to hurl insults at each other in the time-honoured way such as:
If anyone else is thinking “who?” and not finding anyone likely on Google, this is General Roberto Vannacci, MEP, a wop.
I just like that insult list. Crackin’.
The Italians are very good at that, much better than our poor selection. Pace Roger’s, you don’t hear much of that splendiferous tome in general speech.
He looks and sound superb and is there any chance Reform can put him in as president of the Republic once Charles and William are removed .
What a wonderful place Italy is. It even has a town called Arsoli.
Is that a name or a description?
Mind you, France has one called Condom.
The purpose of saving is saving…
Is a tautology. It tells us nothing. Compare: The purpose of life is life.
Spud’s false statement can be amended to:
The purpose of individual saving is capital accumulation for the individual or his family.
Which is true…No?
That may be true, but Spud used “should” and not “is”, so it’s just another one of his grabs to take charge of everyone else’s money.
No. For him, it’s always about the collective.
The primary purpose of individual saving is to ensure that sufficient money will be available at some future date for a specified purpose. This may be to buy a house, or a car, or some tools or (for the young) to be able to buy Christmas presents for his/her family.
When I was 17 I got a job in the summer holidays and saved most of my earnings, some of which I used in my last term at school to enjoy some relative luxuries. After Christmas I left and got a job from which I saved enough to be able to live a slightly more civilised life at university (I wasted quite a bit of it on buying new textbooks instead of second-hand ones).
So, Theophrastus, the answer is “usually, but not necessarily so”
Indeed. The purpose of saving is spending.
I wonder whether the squirrel community features an equivalent of Murphy, insisting that the purpose of burying acorns is the formation of new oak trees. And what happens to him in winter.
The squirrels and jays in my garden forget where they’ve buried half of them, hence the tiny oak saplings I have to pull up every year.
The reproductive strategy of the oak. If the pigs ate them all, there’d be no oaks in a few centuries.
As usual, his problem here is he doesn’t know what the words he uses means.
Such as why saving is different from investing.
His statements that when people lend money to the government they don’t want it back (what? Ever??) and that they’d be happy receiving no more than BofE base rate when he wants negative rates and the printer going brrrr are just bizarre.