The Ultra-Rich Are Saving Their Money Instead of Spending It – Now the Middle Class Is ‘Buried’ In Debt

Ann Logue   Sun, September 5, 2021,

 It’s easy to roll our eyes at outlandish spending from billionaires – say, buying NFTs or yachts – but their spending is good for the overall economy. Their savings, however, are not so good, according to new findings published in the Chicago Booth Review, which reports that the 1% has “buried” the middle class in debt with their saving habits.

 A Harvard study tracking credit card debt resulted in similar findings last June. This time, Amir Sufi, a professor at the University of Chicago, discovered that the top 1 percent of households in the US currently have just as much influence as emerging-market economies in fueling the debt of the bottom 90 percent. Here’s what happens when that money sits in what is essentially “financial storage,” rather than being spent on goods and services.

 Savings Earn Interest From Loans

Sufi and the economists he worked with looked at the glut of savings on world markets. One of the reasons that interest rates are so low is that there is a big supply of money relative to demand. At a basic level, banks take funds from savings accounts and lend them out to earn interest. With so much money available to loan out, banks heavily promote mortgages, credit cards, student loans, and other products that bring in interest income.

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https://finance.yahoo.com/news/ultra-rich-saving-money-instead-230007398.html