Friday, January 6, 2017

Let's Talk Savings

Let's talk about savings. We can all agree that savings are a good thing, or at least I think we can. Whether you are an Ayn Rand libertarian or a Lyndon Johnson liberal you undoubtedly consider putting some money aside for retirement, college, a new car, or a rainy day a characteristic of all good Americans. Saving some of their money is what responsible people do. Savers are hardworking, industrious, smart, and foreward-thinking. Savers are planners and doers. They are the backbone of the American economy. We should all save our money and build up as much of a financial surplus as we can - right? Right! Of course. And many, many of us do, both liberals and conservatives.

There are so many ways to save money, from stuffing it under the mattress to keeping a bank savings account, to contributing to an IRA or 401K account. But one of the most popular ways for Americans to save, not to mention the safest way to save, is to buy US Treasury securities. The US Treasury has a voluntary public program by which it holds peoples' US dollars in savings for varying lengths of time. At the ends of those times the saver can get his dollars back with interest, very much along the same principle as a bank Certificate of Deposit (CD). The savers' deposits are called "securities" and the Treasury refers to taking in savers' deposits as "selling securities". US Treasury securities are super safe because they are held in accounts at the Federal Reserve Bank and are guaranteed by the good faith and credit of the US government. American individuals are not the only ones who save by buying Treasury securities. American businesses, pension funds, banks, the Federal Reserve itself, plus foreigners, foreign companies, and even foreign governments save their US dollars in US Treasury securities. Treasury securities currently amount to nearly $20 trillion. That is nearly $20 trillion out of circulation, not exerting any inflationary pressure on the economy. $20 trillion neatly and responsibly tucked away in savings by people who voluntarily sought out and found a safe vehicle for the extra money they have chosen to save. So, I think we can agree that US Treasury securities are a national asset, a good thing for the mature, adult people among us who have opted to live within their means and not spend all their money frivolously. So, there you have it - savings - the signature of a responsible nation, provided and serviced by the US Treasury. It is a very good thing.

Oh, one other word about the $20 trillion in US dollars saved in Treasury securities. They have another name. They are also known as the "national debt", you know, that same horrendous national debt that so many of us and our political representatives are so afraid of and so anxious to eliminate. Cognitive dissonance anyone?

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