Savers vs Borrowers

It's been a year since my last lunch with H.B. and I love to hear his  stories and one-liners.  M.E.B. and H.B. were our neighbors from 1988 to 1992 when we lived in our condo. My office is next door to M.E.B.'s office coincidentally.  Consequently, I wanted a face to face update from H.B.  A confirmed Libertarian, H.B. is a refreshing person to talk about limited government. 

His best one liner today was "Defend my shores, deliver the mail, and stay the HELL out of my life".  Given the downsizing of the US Postal system, it seems government may be failing on all three.  You can guess where the conversation went from there - taxes, social security, healthcare, inflation, the economy, and the constitution. 

H.B. mentioned he had gotten to the restaurant earlier since he needed to make a deposit at the bank.  Oh. "I replied, you must be a saver -  afterall only savers deposit the others withdraw."  This was particularly important as I talked about the recent article I had read where John A. Allison (ex CEO of BB&T bank) pointed out the deeper issue of our economy right now: "The Fed says that it's currently holding interest rates below market rates - which means it's redistributing wealth from SAVERS to BORROWERS". 

Inflation is the same thing - a hidden transfer of wealth from savers to debtors and we all know who the "mother of all debtors is" -  The U.S. Government.  Hence inflation becomes an insidious tax and incentive not to save.  This, you could say, is class warfare - pitting the SAVERS against the BORROWERS. The irony is that to be able to borrow - someone had to save first.  It is interest rates that create the counterbalance to the unfair redistribution of inflation. But the Fed is messing with the interest rates (a form of price controls).

The government (and I include the Federal Reserve in that category) has meddled again in our lives.  George Shaheen at one of the Accenture conferences said it best when asked about the upcoming election between Clinton and Bush - "Whoever wins - I just hope they keep their hands off the dials". 

That was a more diplomatic way of saying what H.B. felt about government and the economy.