The World’s a Mess. So They’ve Stopped Saving for Tomorrow | Hacker News Reader

The World’s a Mess. So They’ve Stopped Saving for Tomorrow

nytimes.com

39 pointsartur_makly40 comments

And I think the somewhat scary thing is that we've become a "bailout nation" at so many levels (both at the high end, e.g. "wall street bailouts", and at the low end, e.g. extremely generous covid unemployment benefits), that a lot of these folks will be bailed out for their poor choices down the road by the rest of us.

So it can make someone who is naturally cautious and prudent feel like a sucker when the shit hits the fan, because while they were delaying gratification and risk taking, the people who did "live for today" then get to cry poverty and get bailed out.

Worse, if you are prudent and save, you can end up being demonized as a "hoarder" when the tide goes out by those who weren't wearing swim trunks. This happened to my family during Covid. I have a family member in the medical field, who has always kept a decent-sized stock of surgical masks and other medical gear around, and was pretty prescient in early 2020 when the news first started coming out of China, stating "people don't realize how bad it's going to get." When Covid first hit, when medical authorities were still claiming "masks don't work for the general population", he always wore a mask in public, and in one case was derided for "stealing" masks from those who need it (FWIW he works in a hospital).

I bought ffp3 masks on 20th Feb 2020 since I could see what was unfolding. A month later my coworker accused me of panic buying. That was just forward planning? At no point was I panicked when I clicked the buy button in the freely available mask products.

Savers constantly get bailed out by the artificial 0% lower bound which is obviously unsustainable. It means things like temporary economic downturns aren't allowed as otherwise people flood out of their risky investments, fire people and hold cash to avoid losses that are artificially declared nonexistent on cash. Someone has to pay for those losses, either people become unemployed and subsidize the savers by living a life in misery or the saver pays for the damage he caused which obviously can only happen after the fact through inflation.

Because the economy isn't allowed to decline for even a single day, the government must ensure that it keeps growing by any means possible no matter how stupid.

The other reason people aren’t saving is record low interest rates, while the rich can keep money in market accounts and get returns up to and over 5% until extremely recently the bank interest rates in many countries are under the rate of inflation and in many countries they still are.

Why put it in the bank if all that is happening is your money slowly becoming worth less rather than turning into more via interest in a savings account.

Almost anyone in America has access to low fee index investing at the push of a few buttons

It’s easier to open a Robinhood account than a savings account at a typical bank, tbh.

You can buy $SPY on Robinhood

>while the rich can keep money in market accounts and get returns up to and over 5%

Sure, if your money market fund is backed by junk bonds as collateral maybe. But that’s hardly the same as an FDIC insured deposit or UST collateralized fund. The yields on those are not great no matter how much money you have to invest.

You are confused. US Dollar money market accounts haven't yielded returns anywhere close to 5% for over a decade.

Not rich people in the US.

https://www.schwab.com/money-market-funds

https://www.morganstanley.com/wealth-investmentstrategies/ra...

I think he's just saying they can put their money in the stock market.

I thought what you thought when I first read this.

In the US, I Bonds are currently paying 9.62%.

Up to $10k per person (more with certain workarounds) with other limitations.

This is incorrect. As people save more and consume less, interest rates get lower and lower. In fact, since people don't have to pay interest, they get to save more and more as the bank gets less and less of their money. Japan and Germany have the lowest interest rates and aren't known for saving less.

Also, liquidity preference predicts that people will save an unlimited amount of money at 0% interest if they have sufficient income that exceeds how much they intend to spend.

People in their 20s have been living like there is no tomorrow for a long time, not just recently.

It is also not new to think the world is falling apart, or to respond to that observation by saying "but this time it really is". Self-centeredness, myopia, and bad decision making are the rule, not the exception.

And it's worth noting that self-centeredness, myopia, and bad decision making do not end when you grow up. The world these people say they're cashing out of was created by those very things. Maybe deciding not to care about the future is a part of growing up.

This time, it really is though.

Interesting anecdote. I'm looking for some land right now and my real estate agent is 23. He was telling me that amongst his friend he is mocked for having a job whereas the goals of every single one of his friends is to collect as much benefits and stimmies as possible and vote for politicians who are going to keep it coming, he specifically mentioned Yang.

And fwiw, this is in the PNW islands, an exceptionally wealthy area. These are rich kids.

It was interesting to hear this first hand because I'm not around anyone that young these days.

This seems so... stupid. In the moment, you can always tell yourself the world is ending and that there's no point. But we have a 15000 year track record (modern civilization) that things are going to keep functioning and you'll be around tomorrow to live with today's choices. Most things are normal most of the time, and neglecting to prepare for the likely outcome while instead focusing on the .00001% chance of collapse is foolish.

It's like the preppers who spend their entire life savings on a preparing for an apocalypse that never comes. It's just stupid.

It is stupid, but I see this attitude in several people I personally know who are in their 20s. I'm talking about people who could afford to save or invest some money, but don't.

I keep telling them that whatever doom and gloom scenario they expect of the future will for sure be even gloomier for poor people than for those who have at least some money set aside.

Civilizations have ended in a much shorter timeframe than that. Just this year, any pretense of civilization in Afghanistan, for instance.

Its not the entire world, but for those without the means to relocate, what difference does that make?

I don’t think people expect complete societal collapse but significant events that would make whatever they could have been saving worth less. For example inflation is quite high right now, the stock market is tanking, there is nowhere to put money besides like I-bonds that is safe and won’t be significantly affected by current inflation.

Also at least in the US I expect faith in public institutions is at a pretty low point. At least with who I know, people genuinely think the US could Balkanize. We are always told about climate catastrophe and how we are doing literally nothing to stop it.

With that outlook why would you bother to save money now when things are supposedly to only get worse from now on. Money is make believe, if shit goes down having saved some money isn’t going to matter.

If money doesn't matter, who is going to fare the best when things start to collapse? I would imagine, like with seemingly every major event in history, the rich usually end up fine and the poor bare the brunt of the pain and no one cares. If the collapse is inevitable, I'd still rather have money/assets.

But you won't "have" possessions in a "collapse".

Imagine arriving at a concentration camp or whatever future euphemism they come up with.

You could try to bribe a guard with a Rolex. Then he has a Rolex, and smirks at you as you silently scream "we had a deal!".

Or perhaps they grab your hands, look at them, and say "ah, no calluses, looks like you don't do real work".

Or they see your glasses, and say "ah, an intellectual".

Or they see you have gold fillings, and say "you people always have gold".

Any which way, they take everything you have on you and proceed as planned.

What counts, what leads to survival, is extreme luck and being more useful alive than dead. Possessions are no help.

There are other scenarios for "collapse", I grant you. But whatever shape it takes, it always devalues property that depends on stable society and by comparison, skills and knowledge and adaptation become more important.

Also, don't say "shibboleth" the wrong way.

While it’s true that saying the general trend over the last 15,000 years has been upward, it’s a poor strategy to define micro-behaviour of 5,10,40 years (short, medium, long term financial horizons of a human lifespan) against such an enormous time period. It’s just stupid.

It’s better to examine the immediate temporal surroundings and exploit advantages that are likely to materialise in your lifetime - which may include market crashes (there have been 3 large ones in my lifetime) so that one can profit and survive though changes at this appropriate time scale.

Just saying 15,000 years is up, therefore always up, is a poor strategy that misses the nuance of reality

What market crashes? Over a 40 year working career, pick any point in the stock market's existence and you're winning. Short term drops are a non issue if you're an investor.

>focusing on the .00001% chance of collapse is foolish

But...there's a 100% chance of "collapse". What's just stupid is preparing to live forever as a retiree in perfect health.

Even a perfectly average life expectancy is only about ten years longer than standard retirement age.

Many people can look around at their extended family and know that living to be a retiree at all is about 50/50.

Even if you still insist it's idiotic to reevaluate saving for retirement, it seems to me that the current inflation is strong evidence that people are doing it and moving consumption from the future to the present. I don't think anything else can account for the magnitude of the change.

Saifedean Ammous on his recent Lex Fridman appearance talked quite a bit about "Time Preference", and how it shifted once we got off a gold standard. I agree with the basic premise that since we can't reliably save for the future, long term thinking gets discouraged. We've reached the point where only the very wealthy can think practically in terms of passing things off to future generations.

Time preference is a function of wealth. If you are rich your time preference is already low because you can pay for all your immediate needs without flinching. Cutting spending to $300k from $700k is much easier than raising your income to $1 million. As you earn more the money that you don't have to spend at all grows bigger and makes it look like your psychological behaviour is different when you most likely are unable to spend your wealth. There are a lot of enjoyable activities that don't cost a lot of money but occupy your time.

> Before the pandemic, she said, she was putting about $2,000 into her savings account each month. Now it’s half that amount. The rest goes toward a costlier apartment ($600 more in monthly rent), evenings out with friends and small indulgences she would have denied herself before.

> She’s not alone. A recent study by Fidelity Investments found that 45 percent of people aged 18 to 35 “don’t see a point in saving until things return to normal.” In that same age group, 55 percent said they have put retirement planning on hold.

This seems to be the crux of the article. Frankly, given the market is volatile and the sun is shining...

Why the hell would someone in their 20's or early 30's decide to buy stock instead of seeing their friends? Investing in getting experiences they haven't gotten to have for the past few years?

I get "buy at the dip" mentality. But right now, people are buying into the dip of social encounters.

Ha. I was poor in my 20s. Couldn’t save money even if I had wanted too.

In a world where if enough people have some kind of debt, we hear loud cries to cancel it, and politicians have to pander to them, not saving makes sense.

https://archive.ph/nAoKk

I'm paperwork-disabled, meaning I have a lot of difficulty filling out forms, especially paper, but also online. I think it's really sad and unhelpful that one has to fill out so many forms to "make it".

I can see this. I'm supposed to retire around 2050. The idea that there will be any kind of major society seems remote to me.

Aside from the hundreds of millions of refugees, it will simply be impossible to grow much food at scale. Constant wildfires, floods, torrential downpours, drought, and no insects. Also, the aquifers, e.g. the Ogallala will be mostly gone. Also the what's left of the topsoil will be gone. What's left of the Amazon will be mostly gone the rest turned to savanna. Also most of the fish will be gone.

Maybe if we say "net zero" enough times, tens of billions of tonnes of emissions will get sucked directly out of the atmosphere and stored somewhere. Maybe Elon Musk can save us.

In addition to the environment going up in smoke, I feel like society is also going down the drain...trust in government has never been lower, the financial markets are being plundered and sabotaged, and I don't really have that much faith that they'll hold up for another 30 years.

I'm privileged to be able to put $100 a week into a Roth IRA, but the idea that it'll stills be there in a few decades, that no market crashes will set it back to square one, and that it will be able to keep up with inflation all feel like wishful thinking.

I also put $100 a week into social security, but that's even less likely to last.

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