The Spend Or Save Conundrum

Two years ago the economic elite were warning about this country’s nearly non-existent saving rate. The great fear then was that the nation was living beyond its means and excess spending had to stop.

These days the government is betting the nation’s future and its our own solvency on extraordinary efforts to boost spending by the private sector with its own huge infusions of borrowed and newly minted money.

If this causes a too great a spike in lending by banks and too much actual spending by consumers, however, inflation will skyrocket. Unless we immediately start saving again. Which alas could pitch us back into a deep recession or even a depression if it isn’t done with exquisite timing and in just the right manner but every key player in the economy.

What a conundrum. Save or spend. Spend or save. Pay off debts or get further into the hole.

What shall we do with regard to saving and spending? When should we do it?

I don’t have the answer. I don’t have the needed formula, the perfect sense of balance and timing, that will ensure everything will turn out right. And that’s OK because I am, after all, just a poet of the markets. And while Percy Shelley had the presumption to claim that “poets are the legislators of the world,” the truth is that no one has taken us seriously since the days when kings in the old country paid serious attention to the judgments made in rhyme by the old blind guy with the lyre.

So while I won’t prescribe, I’d like to ask this in a respectful manner: Are the people who are now in charge of prescribing, people who bear an amazing resemblance to the people who got us into this mess in the first place, going to call the turn on saving and spending perfectly when the time comes? Do they have the wisdom? Will they have the will? Because otherwise, I fear, coming years will just be a terrifying seesaw of plundered pockets and deflated dreams.

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