Even If Everyone Spends All Their ‘Extra’ Money…

Even If Everyone Spends All Their ‘Extra’ Money…

In the US, some folks (with Larry Summers being perhaps the most famous, and certainly one of the most vocal, examples) are concerned about an economic overheat. One part of that thesis revolves around the notion that if vaccination rollout goes as planned and the economy is able to reopen at "100%" (i.e., Texas style), the accumulated savings built and maintained during the pandemic will be rapidly spent, an eventuality some suggest could be "dangerous" or otherwise inflationary. Lower-income
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5 thoughts on “Even If Everyone Spends All Their ‘Extra’ Money…

    1. And, assuredly, street alcoholics will start consuming additional lagers, on the margin, of course. Alcohol and aluminum can demand soars. Overheat.

      Nearby, the junkies will change their behavior on the margin, consuming more needles, as their preference shifts to wanting to use fresh needles over saving and reusing needles. Demand for plastic for plungers and steel for needles will skyrocket. Overheat.

      And the people living in tents in the nearby parks. Their preference will shift on the margin from wanting to live in a tent in a park full of squalor to preferring to live in a permanent dwelling with sanitation. Demand for low-cost housing will soar. Overheat.

      More and more we’re just coasting, living off the infrastructure and nice things (what few we ever had) that earlier generations built, stuff, like like civil society, that we don’t have the good sense to value and maintain for those who come next.

      Thank goodness we have Mr. Summers for we would surely be a broken nation without his wise and abundant bloviation.

      1. Especially since even a lot of fairly well off households… savings is a relative term. If you have $15k in credit card debt, $50k in college debt, $20k in vehicle loans and $5k in a savings account just in case you lose your job tomorrow… is that something you’re likely to dump into consumption the moment that covid restrictions end?

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