There have been policy false starts in President Trump’s short time in office, and some of his policies seem a bit crazy. But when it comes to savings, he got it right. The Trump Account that gives every newborn American a $1000 investment in a tax advantaged index fund, not to be touched before they turn 18 is a great idea; a type of policy that can help make “America Great Again”.
Policy makers have given short shrift to the power of savings. There has not been a substantial saving policy since 1974 when the IRA-tax deferred retirement accounts were created. The government has appointed people to cut costs. Why have they not created a savings chief, a savings “Czar?
The present US savings rate is 4.9%. It was as high at 20 percent during Covid, and in the nineteen sixties and seventies it was between 6 and 9%. The European Union has a savings rate above 10%, and Japan’s is just short of 10%. The US rate must go up.
The more people save, the more confident they become. The more confident they are, the more engaged they are in the democratic process, as they have skin in the game. In the end, healthy savings rates support a healthy democracy.
Savings rates also curb inflation. In the early nineteen eighties, the US Personal Savings rate started to trend down. It was at that point that the Consumer Price Index inflected upwards. It’s easy to understand, more savings means less spending, and less spending takes some of the inertia away from inflation.
Although President Trump should be given kudos for his new savings policy, it is not enough. More must be done.
The administration should follow through on their claims of loosening regulations on crypto, employing blockchain and stable bonds as savings vehicles. Blockchain allows micro savings strategies to be pursued. As example, Etherfuse allows investors to buy bonds with as little as $1.50 per account. Saving through stable securities is also lower cost. If you lower the cost of maintaining a savings program, you increase the level of savings. Everyone wins.
Savings is a learned skill, a habit. To build the skill and create the habit, why not offer blockchain based savings programs for as low as one dollar to high school kids.
As far as vehicles go, stable coins and bonds that are truly backed by fiat currency or bonds are good solutions. A truly great savings program will include bonds and currencies from across the world. Imagine, with a small savings contribution an investor can have a portfolio of currencies and bonds in dollars, Euro, pesos, and yen.
Once again, Etherfuse can offer bonds in dollars, pesos, euros, or UK pounds. Small investors can have a diversified portfolio. There are opportunities across the world, and all savers, no matter how big they are, should have access.
So, well done President Trump, but don’t stop. Loosen the regulations on stable coins and stable bonds. Let people have multiple vehicles to save with, no matter how much money they have.
This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.
This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.
