For those “doing their part” to keep the economy going, not saving and possibly going into debt, are they counting on society to take care of them when they can no longer work? Are the younger generations expected to keep Social Security and Medicare going for retired baby boomers AND keep up with the massive debt we have created for them?

I for one don’t believe it is possible. If you don’t want to spend your later years in poverty, start “hoarding” now.

Good comment. Thanks.

CR,

Very good points, we are just time shifting by savings. Consuming later rather than now. I agree saving forever is just wasteful.

James,

I was just picking round numbers off the top of my head. Free free to adjust it to anything you like. I really don’t expect everyone to max a TFSA. Hell the only reason I’m going to do it this year is to move money I already have into those accounts.

CC,

Now isn’t that the truth. Regardless of the stimulus works the politicians will say “Look we did it!” like some how I should thank them for putting my kids into more debt since I’m never going to see it get paid off. *sigh*

Tim

If interest charges from my overspending today amount to $250/month. That 250 bucks is gone forever. If I spend the interest I accumulate from my savings, we will all be better off eventually.

Obviously this is no solace to the auto workers (scratch that, FORESTRY workers) who are jobless right now. Also, politicians only look as far as the next election. If they can stimulate the economy for just a year or two, they can point back and say “See?! We fixed it!”

I did want to comment on your example though…

“If just 10 million of us on average max out those (TFSA)s…”

Just 10 million! There are only 20 million people in Canada aged 18-65. The median income is below $30k per individual. There can be no reasonable expectation that half of the population can maximize the TFSA.

Spending to stimulate the economy is socialized saving. We are after-all a socialist country. For every dollar spent you are “saving” for everyone else in the form of gov’t sponsored benefits. Excessive saving (or hoarding) by the mass populace is actually detrimental to the socialist savings plan and erodes the purchasing power of the savings itself.

There is no need to “save” as an absolute concept, forever. It should be a flow. You provide something to the world and get money in exchange, which you have to give back to the world so that others can do the same as you. You should consume almost everything you make during your lifetime anyway or else what were you doing?

I don’t mind the idea of saving for a rainy day, or using money as a resource to make more money and consume more. Saving as hoarding is not helpful for the economy. That said, I don’t “waste” my money on people who don’t offer me things that are useful. Like do we need to employ people in making the 10,000th different model of cell phone? I don’t think so.

In my opinion, credit is what go us into the mess. That is, consuming future dollars. This is a terrible sin.

I’ve worked at a company that was growing too fast, and one that was shrinking too fast, and both are very wasteful and stressful. I think companies would be more efficient and profitable if they could depend on a steady stream of sustainable spending, rather than these overspending/oversaving boom/bust cycles.

http://www.econtalk.org/archives/2009/01/fazzari_on_keyn.html