Hoarding is a malphemism for “excessive saving”. It’s causes are divergent. Greed could be a cause. Fear of the future could be a cause. Self-restraint could be the cause. A long-term goal that cannot be satisfied except by significant accumulation could be the cause. A disruption of the environment conducive to investment could be the cause. Greed is bad. Fear is not. It is natural. One would want to look at what is feared and what is causing it.
How to stop hoarding? How about inflation? Sure, why not? How do you stimulate spending now as opposed to spending later (which requires saving)? You simply set things up such that money is worth more now than it will be later. Are we doing this in America? By official policy. It is the stated goal of the American government to maintain 2% inflation.
Think you are saving for retirement? Who has done the calculation about what your money will buy in 30 years? You are not making the mistake of assuming constant value in the money you are saving are you? Again, by official policy the government is aiming for 2% inflation. All of your “fixed” income if not growing is being reduced steadily in its value.
Who hates deflation the most? Those in debt. Those in debt borrow money when it can by less and then owe it when it can buy more. They borrow cheap dollars and have to pay back valuable dollars. Who is in the most debt? Government. China. The United States. Russia is doing pretty well and has also divested much of its holdings of American dollars.
If you were going to make a bet about the next 30 years? What would it be? Growth in inflation or reduction in inflation? Boy has both business and individuals gotten really cozy used to government support. That support comes ONLY from that which would further dampen production and trade OR printing more money. So, the policy expectation should be downward pressure on taxes that can be extracted and a willingness to print to get out of trouble.
This flood of dollars needed to satisfy the dependent, will its flow be shut off? What would happen to the banks, the businesses, those who hold savings in banks, those employed by businesses if the the funding to support through taxes or printing continues to slow? Crisis.
What happens if the funding continues to grow in order stave off that crisis? Inflation.
What should I (or you) do now if we want to avoid the cost of this inflationary pressure? I immediately turn to owning commodities. I don’t mean to sound old-fashioned. I don’t think retail is wise. Consuming will continue to slow. Dependency on government is not a cake walk. It enables some consumption but not as much as the free market. But what will be consumed will go up in price. It is such a sticky situation when the inflation comes amid unemployment (Stagflation) or reductions in employment and the consumption that goes with it. Those who can spend will have to spend more. But there will be less demand for some goods.
Get ready for it. Gold and silver? It is not individuals who are going to be hoarding this commodity if it is hoarded (creating inflationary pressure). It is central banks. The big boys. If the fiat currencies devalue (money-supply side inflationary pressure) and demand for them decreases, that medium of exchange will still be demanded. And even more than ever in recent memory.
In 2009 silver hit $48(?) an ounce in spot price. What will a decade of stimulus followed by another crisis followed by even more monetary stimulus do to both the increase in supply of dollars and the decrease in demand for them the next time silver spikes? My sense is silver will absorb even more of the unwanted dollars than it was able to in 2009. $60? $70? $80? I don’t know.
But the bet that faith in fiat continues to diminish and the supply of fiat continues to increase makes silver a rather interesting bet.
PS-this post was written in 06/30/20.