It has always seemed to me that there`s two other things one can do with money besides first consuming and second investing .... in a very general sense, one thing is donating, and the other is hoarding ....one can get into an extensive discussion of each of them......but Id like to suggest that the present environment, incuding the factors that you talk about here, aging demographics, an economy with abundant overproduction capacity, and an expectation for diminishing returns going forward ...is quite conducive of hoarding .... this is some of the motivation behind acquiring real estate, or mineral reserves, or gold or silver or other commodities that can be stored, or fine art, or blockchain derivatives ....the boundaries are fuzzy of course but to some extent the motivation for purchasing any of these is often primarily wealth retention and protection rather than investment and production ....

Right now Im trying to watch worldwide oil inventories, which is difficult since everyone wants to hide what they have .... but 18 months ago in the USA at least storage reached the point of being absolutely full, driving futures prices below zero because there was simply no place to put any more. However since then the production has been consistently less than the consumption and the storage tanks are being steadily drained worldwide.....meantime the people who earnestly believe that the economy can be retrained to work without any oil at all within 10 or even 30 years are betting heavily on shorting oil futures contracts and oil companies, and so the futures are heavily in backwardation and anyone who has a choice between selling oil in storage or drilling new wells is choosing the first choice ....and Im starting to get intrigued by the possibility of a rather unexpected collision when the tanks all get close to empty ......

Expand full comment

Lots of good points in here!

Donations are counted as transfer payments by households, which means they are a type of "outlay" akin to interest payments and consumption but not savings. In practice the amounts tend to be pretty small in the aggregate. One interesting question is the extent to which donations may or may not have shifted from directly supporting the consumption of others vs. going into charitable endowment funds (which are simply savings vehicles managed by somebody else).

I agree that the rise of hoarding is a big deal and consistent with the dynamics driving down interest rates. If you think the real returns for taking risk are going down, one option could be avoiding investments in the real economy at all, because the relative cost of locking in a loss is lower than in the past. Same logic for why the gold price tends to move inversely to TIPS yields.

Expand full comment