Was the American Middleclass an Historical Aberration?

[NCR85]

Re: Was the American Middleclass an Historical Aberration?

Let me explain my point here a little more elaborately:
If compensation is a rough proxy for what is consumed and productivity is a rough proxy for what is produced (in theory), then the difference between the two is deferred consumption. When you call this by it's conventional name, "saving", this sounds innocuous, but let's break it down a bit. Saving is nice when you get rewarded for it at a later point, but it's effect in the presence is negative to the saver: he has to live "below his means" for a while to build up savings capital. I'm interested in the situation where a monetary authority forces people into the role of savers indefinitely by forcibly inducing credit market growth every time people try to "pull out" of the savers market. If the savings pool is never built down again and turned into what people sought to achieve by saving, i.e. consumption, the effect would be: perpetually deferred consumption, in other words, claims to wealth that can by definition not be turned in for the wealth it is supposed to represent. Which on a society-wide scale means GDP and productivity numbers that way overstate the amount of wealth the society can generate.

The story is a little hard to square with the fact that the US still has about 70% it's GDP consisting of consumption, so I'm not 100% confident in stating that this is what is going on, but it's a worthwhile thought.

I feel like the term "savers" is not really suitable here because in an endogenous money system, most "savers" are really reluctant vendor financers: people who accept an IOU in exchange for a service rather than an immediate payment. So while this "saving" is still a relatively good thing to them compared to having nothing, it is bad relatively to simply immediately getting paid. It's not really like there is a lot of responsible saving going on by the conventional definition of the term, more like gullibility towards being given IOUs rather than real goods in exchange for one's work.

[aaron]

Re: Was the American Middleclass an Historical Aberration?

That sounds like Japan, with everybody buying their government bonds.