Savings During Inflation
Inflation is no bogeyman. It is a destructive force that hits the rich and poor, the prudent and the extravagant, the wise and the foolish. But that is no reason for us to give blind allegiance to all the soothsayers and pessimists who would deny the progress we are making in raising the living standards of the people and in strengthening the United States against economic shocks.</br></br>The scaremongering ads and inspired articles of the American defeatists conclude that in this process we are being ÛÏrobbed of our savings.*Ûª Undeniably the $25 income from the S18.75 United States Saving Bond purchased in 1941 and cashed at maturity in 1951, cannot buy in groceries, clothes, etc., as much as the $18.75 did when you laid it away so confidently 10 years ago.</br></br>ButÛÓthere is a very close relationship between income and ability to save. Thus, when income and employment arc low, people have to spend almost ail of what they earn for living expenses. At the depths of depressions such as 1931-33, not only didnÛªt we save but many had to use past savings and even go into debt. On the other hand as incomes and employment expand, total savings increase and the proportion saved out of income rises.</br></br>All during these past 10 years when consumer prices were rising, employment was increasing and incomes were mounting. People were more able to save, more people were saving more. In fact, the United States Treasury figures show that the average ÛÏliquid assetsÛª* held per family (in the form of currency, de-mand deposits and securities)</br></br>The Federal Reserve Board Survey of Consumer Finances shows that 60 percent of all positive savings in 1950 were made by the top 20 percent of our income receivers. Down at the other end of the scale the bottom 20 percent accounted for 3 percent of positive savings. This compares with 66 percent and 2 percent, respectively, for the proportion of savings made by these income groups in 1947.