EC Americans Used To Be Savers

An article, a reflection of his childhood, The Financial Times’ Berlin Correspondent Tobias Buck recently wrote of Germany’s immutable obsession with saving money. His behind-the-scenes account of piggy banks and children’s decorated money boxes (some, 400 years old), stored in a back shelf of the German Historical Museum stirred the memory dust for some guy in Texas. Me!

The recollection of a husky awkward second-grader at Morris H. Weiss School P.S. 215 in Gravesend, Brooklyn who couldn’t wait until (every) Thursday when a representative from Brooklyn Savings Bank came to collect coin and dollars for FDIC-insured coffers. His name I can’t recall; I do remember feeling the excitement of having my blue-pleather passbook savings bookmarked by another financial milestone. Stamped with the date and a new (higher) balance. It made me happy.

As a society, we made kids excited about saving money, once. Sure, we spent. When I was a kid I drove my mother crazy because I was only interested in popular name brands of food. I was a sucker for television advertising. For example, I would only eat the bacon with the Indian head profile complete with full headdress, on the front of the package – can’t recall the name now. Of course, it was the most expensive and as a single parent household, mom was on a tight budget.

I still remember catching her placing a less popular bacon in an old package of the brand I liked.  Come to think of it, I think she did this often. I recall on occasion my Lucky Charms not having as many marshmallows. As I age I realize I’m fine with tricking children. Buy the Frosted Flakes, keep the box and replace with the generic brand to save money. Today, less expensive brands are tough to tell apart from the premium ones, anyway. Try it.

But I digress…

Throughout the financial crisis, nations threw fiscal stones at Germany for guarding their budget surpluses like Indiana Jones cradling the Holy Grail. The world demanded Germany spend, spend, spend – get all Keynesian, purchase imports from beleaguered brethren, get their citizens to purchase junk they don’t need. C’mon Germany, we’ll be your best friend if you give Greece a free pass.

Before the Great Recession, the sovereign was a magnificent fiscal vacuum. Still is. A juggernaut of an export-oriented economy sucking in the bucks from European nations. Even today, Germany can’t catch a break for their ingrained (it’s in the blood), austerity. Donald Trump, the European Commission, IMF Chief Christine Lagarde beat up on Merkel for her nation’s trade surplus. Recently, Lagarde urged Berlin to increase domestic spending and boost imports, lamenting over the burgeoning account surpluses she claims are partly responsible for the rise of protectionism. Yep. Believe that? Most of the world abhors savers and adores spenders.

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Moon Kil Woong 7 months ago Contributor's comment

Sadly the things people really need are what is bankrupting people today. Housing costs, education, and medical expense inflation is off the board and is deflated by the "official" inflation measurements. However, this is what is killing our economy and stalling any hopes of strong growth. The author is right that strong growth comes from savings, ergo the concept of capitalism.

We as a nation must learn to be a bit more austere, however, it is a hard nut to swallow. Likewise, it is hard to get the average and lower income to save when they can't afford rent and medical costs. And people complain the rich saving just increases income discrepancies. It is not an easy problem, however, the main problem about housing inflation can be solved by making it harder for mass speculation in housing by removing tax deductions for anything but your primary residence, requiring at least 10% down payments on homes, no diversion of property taxes on taxes by anyone (corporation, individual, or REIT), and restricting foreign ownership of US homes. These may not be the best solution. I'd be open to other suggestions.

Medical costs will stop skyrocketing either when there is universal health care such as other countries, or when there is no government intervention. The steep rise in healthcare costs has been correlated to the increasing intervention in medical costs by the government. Without this, medical costs will have to readjust to what the market can afford not what the government will pay making it unaffordable for us mere mortals.

Kurt Benson 7 months ago Member's comment

Lol. My parents pulled that trick of putting the cheap brand in the brand name food boxes too.