In his most recent column for the New York Times magazine, Adam Davidson takes a look at the people who could give our economy a long-awaited boost: savers—basically people who have actual money to spend, but aren’t spending it.
How many of us have money saved up, but still feel a little too unsure about the economy to go out and spend—to move to bigger homes to accomodate our growing families, replace all the broken things that we own, or take a nice trip somewhere?
Davidson argues that it’s just not the savers who need to get a little riskier with their money. Banks, which have done things like reduced consumer credit to cut back on risks, need to get back in the game to generate growth, but play the game in a smarter way.
Too much risk creates crises, but too little prevents economic growth. Quantitative easing allows the Fed to take away those mortgage-backed securities and force banks to do something riskier with their money, like offer competitive loans to riskier people. Once everyone is putting his money into slightly less safe, and slightly more productive, investments, the economy will take off. That’s the theory, anyway.
Now, if only I can believe that the banks have actually learned some lessons from the financial crisis.