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Comment by alxmng | Hacker News Reader

Who cares about keeping deposits safe when money isn’t worth anything?

Americans don’t even have money in the bank. Median savings is $4500.

Many people who perform socially useful jobs can barely afford the basic basket of goods like rent, food, and transportation.

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My money still seems to work great. Those are some serious fiscal and social (but not monetary) issues that should be taken up with Congress not the Fed, and not the FDIC. Who handled this all very well I might add.

> Median savings is $4500.

The average American family has a $748,000 net worth, according to Federal Reserve data, median $121,000. Savings isn't just what's in your 'savings' account. Mine definitely isn't.

Money is a medium of exchange and unit of account. It's not a tool for building wealth, and it's not a long-term store of value. It never was. They shouldn't have money in the bank, they should have it productively invested.

By your numbers, the median American family could put their entire net worth towards a cramped condo and still be making payments. That is not the image of stability that you're pretending it is.

It’s hardly the image of stability but saying people only have $4500 and it’s the Fed’s fault is wrong in two ways.

Problem being that total assets does not measure liquidity. That people only have $4500 of cash is a significant problem if they have a relatively minor emergency. Especially in the US, where a $4500 hospital bill is pretty cheap.

Sure, but you can't mark 100% of non-cash net worth as completely illiquid. You can borrow against the value of your home, borrow against the value of your 401(k), sell your stock. If you need a few days to move money around, there's credit cards. Personal loans. It really depends on what you're trying to measure.

average!= trimmed average and the real number to use is median. the upper and lower percentiles skew the data sooooooooo much. in statistics, one of the first things you learn is to not make decisions based average, but used trimmed averages and median.

121k net worth is NOT a good number to be sitting at when you are 45, let alone at 65. that is. savings rate faaaaaaar below what you need to provide for yourself in old age one you can no longer earn income. we do not want to generate a class of people reliant on aid for basic subsistence. also note that net worth is not liquid for most people. people can't live without shelter, or without transportation to their jobs, and so they cannot liquidate their car to tap into their net worth for food costs. 121k median means peoples net worth doesn't even come close to covering their shelter requirements.

for most people money isn't even working to get them by day to day, let alone working two functions of today, and saving for tomorrow.

The average net worth of me and Elon Musk is $96.3bn.

mean is totally inappropriate here (but good that you provided median)

The problem is the difference between the average and the median.

> Americans don’t even have money in the bank. Median savings is $4500.

> Many people who materially contribute by doing socially useful jobs can barely afford the basic basket of goods like rent, food, and transportation.

I... hate that this is so accurate...

> Americans don’t even have money in the bank. Median savings is $4500.

But M1 is about three times M0; the difference, about $12T, comes to about $400K per American, so some Americans do have significant money in the bank.

Does M1 include accounts held by companies/businesses?

AFAIK yes, it includes all demand deposits regardless of who the depositor is.

As far as how that affects the calculation I made, from what I can find online, total cash on hand for US businesses is about $1T, so that would have to be subtracted from the difference between M1 and M0 to find average cash deposits per person for individual accounts.

On the other hand, $4500 is nearly 3 months of income for quite a few people, pre-tax. ($10/hour, 40 hours a week for 3 months is $4800). And it isn't like you are going to be able to save much at those wages.

In other words, a significant amount of Americans have little-to-no money saved.

Correction, about $40K per American (or about $37K if we subtract cash on hand for businesses, per another post downthread). Still about 9 (or 8) times the median.

If anyone is interested, as I was, data up to 2019 comes from [1].

Note that it's plotting medians of those who hold the asset, so i.e. "non-residential real estate" (held by 7% of households) is median $70k.

[1] https://www.federalreserve.gov/econres/scf/dataviz/scf/chart...

Ah but we have a solution to that: its called going into a crippling amount of debt which one will never be able to pay off, which will guarantee a revolving door leading right into the bank's pocket book!

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