Today the Washington Post published an article titled, “71 Percent of Americans Aren’t Saving Enough for Retirement”. As the title implies, the average American continues to be in a financial bind. I thought the article was interesting and provided several attention-grabbing statistics on savings. The statistics were pulled from a survey conducted by Experian and Get Rich Slowly.
Articles that conclude Americans are not saving enough are not new. Nevertheless, the savings rate, or the inability to save, is an important economic indicator. Knowing the cause and trend of the savings rate is important in determining the health of the consumer. Commenting on the trend the article states, “The trend is the same, but it seems the numbers are getting worse.” The survey results show 58% of survey participants “feel the same or less secure in their finances than last year.” As it relates to the cause the article states, “Lack of income is considered the main reason for financial woes, not fiscal misbehavior.”
The statistic that I found most interesting was, “71% of people in the survey said they were not invested in the stock market,” and “41% said they had no plans to invest in the future because of a lack of funds.” In other words, according to the survey, most Americans aren’t benefiting directly from asset inflation as they don’t own many of the assets being targeted by central banks. Again, only 29% of people surveyed are invested in stocks.
I was surprised to discover the percentage of people invested in stocks is less than another ownership rate I recently bumped into while analyzing a pet-related business. According to an APPA (American Pet Products Association) survey, 42.9 million households, or 35%, own at least one cat. This is fascinating. According to the Washington Post and the APPA, more Americans own cats than stocks!
Considering there are more cat owners than stock owners, maybe the Federal Reserve should target and inflate the prices of cats. Why should stock prices be the vehicle of choice to transmit wealth? Based on the subpar economic growth generated this cycle, along with growing income inequality, current asset inflation policies don’t appear to be working as planned. Maybe it’s time to switch the beneficiaries of monetary policy from stockholders to people who own things, such as cats, that are held more broadly by the general public. I believe it could be argued that monetizing cats would be a more equitable distribution of asset inflation.
Assuming 47 million households own cats and there are on average two cats per household, that’s 94 million cats in the United States. If the Fed set the price of cats at $1,000 through cat monetization, that would put approximately $100 billion directly into the economy through the cat wealth effect. If central banks can monetize and set the prices of stocks and bonds, why not cats? Let the QE of cats begin!
If all of this sounds absurd, of course it is. Driving up the price of certain things or assets that only a select group of the population owns is absurd. With an unlimited balance sheet, the central banks can inflate and set the price of practically anything. If things go well with cats, maybe the Fed could monetize dogs next. Considering I have two old mutts at home trading at salvage value, that’s a QE I could believe in!