Savings is mere rhetoric. People don't put savings in a savings bank or any other kind of bank. Depositors buy bank credits and sell cash, other bank credits or debt in property trades each known as a purchase and sale.
In a purchase and sale, selling cash or perhaps other bank credits and buying an interest-bearing account, a bank customer becomes a capitalist who buys a share of future bank profits, which gets called interest. It's mere deceptive rhetoric to call such a capitalist "a saver" or one "who has savings" even when the bank customer capitalist is a wage earner.
Depositors get deposits as evidence of their right of action against bankers when in a purchase and sale, selling their cash, other bank credits or debt. Bankers become owners of said cash, bank credits from other bankers and debt bought in a purchase and sale from depositors.
Bankers and other capitalists deal in property with confidence in forthcoming profits, transmuting property that lacks saleability into property that does, enabling the adventurer-entrepreneur to transmute property as capital of production into property as wealth for trade.
There is no such thing as "savings." There is only profit and loss.
People work to get profits. People don't work and produce to make savings. To believe that people work for savings rather than profits is to reject reality.
Anyone produces property in hopes of the gain of profit in a purchase and sale. Property always means the right of ownership and never what is owned.
People trade property in stuff because before people can enjoy stuff, they must own it. People pursue profits to buy chattel, services and rights of action. Without profits there can be no purchase of another thing. Cash and bank credits are means to ends.
Profits provide buying power because people seek buying power to buy the things they want from the surpluses they produce owing to efficiency. Otherwise, people would live at bare subsistence content to make little of a few things they need to survive. Under such a state, trade would not exist, nor would credit.
People trade their property in chattel, services and rights of action (credit). People don't trade biens (goods) as the Physiocrats called them nor do they trade utilities as the Mill from Bentham utilitarians called them.
Pettis errs again when he claims income inquality exists and is causal for anything. Income inquality does not exist and thus cannot be causal.
In THERE IS NO SUCH THING AS INCOME INEQUALITY, I use Robert Downey, Jr., to reveal that truth. If someone earns more than another, that is so because those paying for the one earning more pay higher bids than those who pay others less.
Comparing the wages between a brain surgeon and a fast-food drive-thru cashier is deceptive, false comparison.
In both BUT IT IS FOR INEQUALITY! AT WHAT POINT DO PEOPLE STOP EXPONENTIALLY DOUBLING DOWN ON STUPIDITY?, and SPREADING WEALTH, INCOME INEQUALITY AND OTHER MANURE, I reveal crony politics keeps people poor through minimun wage and welfare subsidy and how it is impossible to spread wealth.
Whether as individuals or in tandem for a firm, people work to get profits. And to get those profits, people work to make property in surplus.
In trade, all get governed by infrangible, inescapable law of trade, the Law of Prices. All get constrained by the Axiom of Profit. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer set the price. The Axiom of Profit holds the sum of sales must at least equal the cost of production, otherwise the producer goes to run.
For workers, profit gets measured by the difference of wages less living expenses. For firms, profits gets measured by the difference of sales less outlays. For a given productivity of property made at surplus, if living expenses and outlays rise faster than wages and outlays, profit falls.
Prices have been rising owing to reckless cash accretion and reckless cash accretion has arisen owing to quantitative easing.
Since cash are bank credits circulating in perpetuity, with cash anyone only can pay taxes, buy goods or buy bank credits. Residual bank credits become reserve against more bank credits traded in a purchase and sale.
When bank credits grow faster than output, prices rise. Individuals caught in such a profit squeeze cannot buy vacations in the Bahamas, music lessons, dinners eaten at upscale restaurants, tailored suits and so on.
In YOU LIVE AT THE MERCY OF A CLOWN-CAR DRIVEN BY MEN AND WOMEN OF THE FEDERAL RESERVE, I reveal how those at the Federal Reserve continue to err because they believe in economics rather than trade.
Pettis is quite wrong when he babbles that there can be excess thrift as well as insufficient thrift. That is akin to saying there can be degrees of prosperity.
Pettis fails to understand what thrift means, conflating thrift with savings. In THE WEALTHY PEOPLE EFFECT AND WHAT IT TRULY SHOULD MEAN TO YOU, I explain the word thrift as a Middle English word from about 1300 meaning "thriving, prosperity" and comes from the Old Norse meaning the same.
In prosperity, anyone who wants to work can find work. Profit abounds. Wages increase faster than living expenses. Sales increase faster than outlays. The creation of property grows at an increasing rate.
Pettis errs again when he quotes Eccles who spews silliness about distribution.
The whole mythology of production and distribution comes from the Physiocrats and their effort to support false claims that only farmers and the land produces while all other classes are unproductive and thus should be the ones upon whom taxes should be borne.
It's no wonder why Pettis doesn't get reality. Pettis parrots much of what gets taught by academicians and their economics mythology. Academia economics mythology fails to comport to reality.
Academia economics, regardless of neoclassical school, fails to deal with the phenomena of trade — property and profits. Instead, academia economics focuses upon utility and scarcity, both of which have nothing to do with commerce, which is also called trade.
Trade, which is the purchase and sale of property as wealth made from property put to production, which is capital, to produce property in surplus, is the only reality.
Here are three more must-reads on Bizarro Theater to help you disabuse yourselves from the unreality of economics and income inequality:
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