Originally Posted by
2StgTurbine
Correct. It just shows how difficult it is to make it in the middle class. Somehow when someone finally gets a good job offer at 25 that requires them to move across the country, they are supposed to also be an expert in the local zoning laws. I have had to move a lot in my life for my career and I rarely had enough time to thoroughly research the market. I lived in NYC and SFO and while the housing prices were insane, they were important career moves for me and my wife. Sure, we could have stayed in CVG where our rent was cheaper, but good jobs and cheap houses rarely line up.
Sure, but I would argue that most of the people who complain about housing costs vote in and advocate for the very policies that cause high housing costs.
In 2007, the average American was saving 3.7% of their income. The great recession showed the importance of savings and as a result, Americans started saving more of their money. That was one of the reasons the recovery felt longer than it was - people weren't spending as much. By 2019, the average savings was 8.2%. Even 8.2% isn't that much, but the Fed and many economists were worried that if Americans continued to save, we'd enter a deflationary market. Economists started floating around the idea of negative interest rates to penalize Americans who were saving "too much."
Our economy is built on reckless spending. Our economy requires the bottom 70% to spend nearly all of their paychecks. And while those of us above that line can easily criticize them for living too lavishly (you know, like a family of 4 in CVG living in a 750 sq ft one bedroom apartment without a roommate
), if the working poor adopted Dave Ramsey's method, our economy would come to a screeching halt and the same people that criticize the working poor would be panicking because their 401ks would take a massive hit.
(I'm not sure how you are defining saving and spending, although it may sound obvious it is not. Generally, in economics, saving is defined as whatever is not spent directly in consumption. So savings includes both cash balances (like a savings account) and investment. Spending is what is directly consumed. Is this what you are referring to or only in regards to cash balances? When I talk of savings below, this is the definition I will be referring to.)
The idea that an increase in savings would be bad for the economy is a fallacy made by Thomas Malthus and then promoted and made mainstream by John Maynard Keynes and is continued by his followers.
Nothing can be consumed that isn't first produced (outside of bare subsistence), and production isn't possible without savings. Savings is set by individual time preference, which aggregates into a price that we call interest. Distortions occur when a central authority (the Fed) intervenes to lower or raise the interest rate (or when banks are allowed to create money through fractional reserve banking), simulating a change in time preference that has not taken place. This leads to a mis-allocation of resources and capital consumption, it creates an illusion of savings that doesn't exist and results in a recession/depression. You cannot spend your way out of a recession/depression.
Now, the Fed and others may believe this is possible and may encourage spending (which they do through low interest rates), but increasing savings will not cause the economy to come to a screeching halt.