Fed: US consumers have decided to ‘hoard money’

Fed: US consumers have decided to ‘hoard money’

One of the great mysteries of the post-financial crisis world is why the U.S. has lacked inflation despite all the money being pumped into the economy.

The St. Louis Federal Reserve thinks it has the answer: A paper the central bank branch published this week blames the low level of money movement in large part on consumers and their “willingness to hoard money.”

The only great mystery involved with this notion that we are in a low inflationary period is why the myth persists despite all the evidence our grocery bills post to the contrary. The Fed, however, may be partially correct but not at all in the particulars. Savings does not amount to hoarding as the money in those accounts is constantly being invested and reinvested by way of providing capital to banks making loans. What does amount to hoarding is 80 billion dollars a month being created and then placed into the non consumer economy. To be sure inflation would be far worse were those funds directly injected into the general money supply. And that is something we will likely find out when the bubble bursts and we are all told that “nobody could possibly have seen this coming”.

Kip Hooker:

View Comments (25)

  • OK, let me get this right...10 years ago when the bubble burst ( according to the articles I read at the time) people were the problem with the economy. They were losing their homes because they were greedy and buying too much, over extending themselves, charging credit cards to the hilt and being immature with their spending habits and not looking to the future. It was the peoples fault the economy was bad. Americans were lazy and had become a terrible consumer culture. Now 10 years later more people are saving and looking forward to their futures, being careful how they spend and using money wisely. BUT it is still their fault that the economy is bad..HUH?!?!?

    That description really irks me.. Willingness to Hoard money, I guess next they will call me a Savings Slut.

  • Who gives a shit about cash? If you don't have precious metals, it's all going to be nothing more than kindling before you know it.

  • Older Americans have to 'hoard' money because the rate or return in safe bonds is so low that they don't have the investment income to spend, and need to hold onto as much cash as possible so that they don't draw down their savings too fast.

    Is that so hard to understand?

  • I'm waiting for the Demtards to go after all the money being "hoarded" in 401K accounts. From time to time trial balloons have been floated about taking a 15% whack from all 401K's.

  • Sounds like the Fed's banker friends are getting nervous. But then why keep your money in a bank when you receive little or no interest on it?

  • ......money movement in large part on consumers and their “willingness to hoard money.”

    What money??
    With so many people not working there isn't much money to hoard. It leads me to think the politicians are scooping up a lot of the money.

    • My thoughts too, if you don't have it, cause the government keeps stealing it, how are you going to horde it? You can not horde what you do not have...The Saint Louis Federal Reserve Branch must be run by a relative of Biden's....

    • YEP! This is what this is about. This is about taxation of savings and investment accounts and probably IRA and other retirement accounts. This is what it is about.

      It is patriotic to spend money on things the government wants you spend... like extensive healthcare coverage that you don't even need nor can actually use (like being a male paying for pre-natal care), because in truth that money is not going for your care but for the care of others... like social security. Social security should be voluntary.

      All these things are about taking as much from the producers as possible.

      • Well- all I have to say is that when the big banks got the $800 Billion Tarp money on the premise that it would be loan ready funds to bridge the budding wave of insolvency- so that short term loan money would keep the economy rolling and those banks sat on the money instead (when they weren't using it to consolidate the industry by buying smaller banks)- not a peep from these crooks that brokered that sweet deal... and they are now "blaming" the consumer for saving (hoarding) which is causing this "lack" of inflation that they insist on talking about- that despite the cost of everything going through the roof. This Christmas, constituents are encouraged (by me) to9 take a wet, steaming crap in their congressperson's Christmas stocking hung by the chimney with care and they can all take a one horse open sleigh to hell.

    • It's a precedent for hyper-inflation. They'll make the money (more) worthless, so holding it will be no advantage. Then, they'll do what they do in a war zone, issue military script and make all other money useless, then change the script every 6 months, making the previous script as useful as Monopoly money.

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