Rebuilding Financial Foundations: How Keynesian Economics Discourages Saving and the Role of Crypto and Synthetics in Shaping a New Culture

This article examines how Keynesian economics discourages saving and explores how crypto and real-world asset synthetics can reshape financial habits, fostering economic stability.

Cristopher Andrade

9/5/20249 min read

Personal Savings in Singapore:

  • Personal Savings Rate of 50.8% during the Covid in 2020.

  • Savings Increased almost threefold from SGD$36 billion in 2011 to SGD$106 billion in 2020. (Source) Photo Above

    The future's problem is already here.

I remember watching TV a few years ago and saw a news report that shocked me. The presenter announced that most Americans were living from paycheck to paycheck, without any savings¹. When I came across this, I felt a knot in my stomach, because if the world's largest economy and one of the countries with the highest per capita income is going through this, what would be of people in poor countries?


At that time, this reflection bothered me, but soon after I was able to witness good examples, such as Japan, where the majority of the population saves money² and has emergency reserves, despite the country adopting negative interest rates³ until recently. These negative interest rates were implemented by the central bank to stimulate lending and economic activity, which could have affected savers by eliminating the interest earned on savings accounts. In the past, Japan used various economic policies to encourage spending.

Japan is also known for its lower cost of living, but also for its stagflation and extreme bureaucracy. Nevertheless, the country has very high levels of longevity, very low levels of begging and hunger, proving that without a strong saving culture, it is not possible to achieve a vision where everyone can have a dignified life.

Even with the widespread problems of currency devaluation in most countries, we can see that financial education is the education we all need, regardless of social class, per capita income, GDP, and other factors, as challenges such as high cost of living due to inflation tend to worsen worldwide.

In theory, all of this sounds easy, but one question left me unsettled: how can we demand financial education in countries where people don't even have the minimum to eat, the minimum to study, or the minimum of peace of mind?

I love the city where I live in Brazil, which is São Paulo, a vibrant, joyful, and bustling city at night. However, at the same time that I witness the wealth built in the city, I see people and entire families rummaging through garbage to eat. A lamentable situation that captures my thoughts on how we can solve this and what the root causes of this socio-economic problem are.


I realized this is a frequent challenge in countries trying to emerge from extreme poverty and establish the necessary foundations for progress. However, we know the transformative power of education in countries that have faced exactly these problems and are emerging victorious.

Countries like Singapore⁴, which had extremely high levels of poverty a few decades ago, but with the support of foreign capital and know-how along with the creation of a widespread saving culture⁵, managed to lift millions of people out of extreme poverty and greatly reduce the inequality that is still present, but has decreased considerably. This, for me, is evidence from personal studies that countries with a widespread saving culture can also protect their economies.

Personal Savings in Singapore:

  • Personal Savings Rate of 50.8% during the Covid in 2020.

  • Savings Increased almost threefold from SGD$36 billion in 2011 to SGD$106 billion in 2020. (Source)




It is also necessary to mention that the saving culture does not only come from state incentives, but also from individuals and families who nurture this prominent culture from ancestors who, in turn, experienced difficult times, slavery, wars, and economic hardships.

For the implementation of a saving culture, a great alignment between the applied economic model, leaders, and the population is necessary, but what archetypes of future leaders could make this happen?

Only leaders who communicate transparently, simply, and directly will capture people's attention.

In recent years, world leaders who have embraced greater authenticity in their speech, behavior, and appearance have gained more visibility and a large number of followers. We have seen the world elect leaders with messy hair, presidents wearing backward caps, and politicians who like to end their speeches with a swear word, but the question remains, even with such a difference compared to the communicative appearance of traditional politicians, how did they manage to attract such credibility?

The answer lies in their direct discourse and the visual and oral authenticity they display, with greater transparency and clarity in their final goals in their administrations, concepts well aligned with Druckerian values as described in the book "The Concept of Leadership". These concepts can be used in countries, companies, and individual careers, where leaders of the new generation, both in the public and private sectors, should adopt the posture of an outsider and address the reality of the economic model that has brought inflation, and that unfortunately intends to further devalue their local currencies, making it impossible to accumulate capital in the long term, especially for the poorest.

Today, inflation diminishes our quality of life, a reality I experience firsthand. Upon returning from work, I take pleasure in purchasing a Brazilian chocolate called "Sonho de Valsa". However, during my last visit to the supermarket, I was shocked to find that the company had significantly reduced the size of the chocolate in an attempt to maintain its price amidst high inflation. This phenomenon, known as “shrinkflation”⁶, left my stomach unsatisfied. Reflecting on this, I realized how even small pleasures like chocolate can influence our mood. It's a sobering thought, considering the strain inflation puts on households, forcing some to forgo essentials like meat or chicken due to skyrocketing prices.

No matter how much a genuine saving culture is nurtured, inflation and economic models that emphasize debt rollover and unrestrained printing can create structural problems in a country's economic environment in the medium to long term. It is important to fully disclose these facts.

The subject of financial education is directly influenced by the prevailing conditions in a country's environment. Public institutions need to work hand in hand with the financial goals of citizens, rather than acting as saboteurs of those goals. Unfortunately, achieving this alignment may be challenging with the current Keynesian mentality, which perpetuates an anti-saving mythology⁷. This viewpoint has been criticized by Drucker, who, while rejecting the gold standard, also opposed unrestrained currency printing that leads to inflation.

The solution may not lie in the ideas of the Austrian economy that act in opposition to the Keynesian model, but rather in promoting good social choices by companies, financial support by governments, and a culture of saving collectively.

Future leaders should be authentic, focused on creativity and productivity as Drucker indicated, along with a concern for the well-being of others, but also conveying true values.

The role of financial education: sidekick or star?

Money is a means to achieve our goals, our dreams; the "cha-ching" is a tool to help others, distribute ideas, helping us save time and energy. We know that the course of money does not end in itself, but is only part of the way, but even being part of the way, how important is it to us?

We understand that money can be very important in our lives; we can argue that it will be the subject we will have to study the most in our lives, directly or indirectly. Unfortunately, within the educational system, it is treated as a mere sidekick, when it is actually the protagonist in our lives.

In this larger-than-life episode of the famous sitcom "The Office", which we can momentarily transpose and compare to our lives, money would not be the protagonist. It does not take the place of Michael Scott, Pam Beasley, Dwight Schrute, or Jim Halpert, but rather of Creed Bratton. Creed is someone who has his weight, but only occasionally appears in the story. Some say he is important to the plot, but others say he is not. In this comparison, financial education should have a larger role throughout the seasons and not be simply separated from most scenes of our lives.

Without the diagnosis, it is not possible to prescribe the remedy.

Personally, all knowledge of economic theories other than the Keynesian and Marxist models was acquired outside of school, as it is not of interest to groups that conversations about different types of models such as Austrian or Classical be nurtured throughout the student's trajectory. These conversations need to be unbiased and free from favoritism, using simple and didactic language. This approach ensures that the information is not overwhelming and becomes an integral part of the educational plan for that region.

Without financial education, there is no diagnosis of a flawed system, and without the diagnosis, it is not possible to create a conscious saving culture, and without a conscious saving culture, it is not possible to envision a more equal world for all.


Like Drucker, I do not have a degree in economics, but the desire to understand problems already pointed out by many and the material already available on the internet was crucial for my addition of knowledge in the area. This can be exercised individually in the future through self-teaching via the internet, but only with a saving culture and financial education will this idea take on a large scale, as it is only possible when a nation adopts it firmly and decisively. This brings us to a point that Peter Drucker greatly prioritizes: the decentralization⁸ of power and information. This decentralization allows for quick implementation of positive activities and facilitates significant scaling. Institutions like Aplitech Foundation and Saylor Foundation play a crucial role in this decentralization by providing free education and certifications. It's important that such institutions exist and are promoted to everyone.

The current educational system has already shown evidence of being flawed and not meeting expectations, and even though I do not believe in a perfect system made by human hands, we can make progress on the subject by addressing and mitigating the problems.

Alongside theory, there must be practice, and practice today needs to be aligned with the digital world. Therefore, the digitization of schools should give more prominence to teaching content that prepares students for future adult challenges, such as understanding income tax, consumer taxes, simulations, and credit systems. This is a challenge for the whole world that needs to be overcome, but after digitization, what would come next?

Initiatives to solve the problems

In addition to digitization, current formal education plans lack a long-term vision and impartial governmental support. Better plans can be developed through partnerships with the private sector, such as fintechs and NGOs. Most public elementary and high school education plans worldwide do not teach basic topics in financial education but should address them. These topics would include:

  • How does the state finance itself?

  • What are taxes for?

  • What is income tax for?

  • How does the phenomenon of inflation occur according to different schools of economics?

  • What is the "fractional reserve" practiced by banks?

  • What are CBDCs?

Among other necessary questions.

Although it poses challenges for some and faces backlash from the legacy system, with the support of both state and private initiatives, it is crucial for future students to be aware of the basic financial topics mentioned above. This awareness enables them to make informed decisions about their finances, question how the system operates, and identify collective shortcomings. In medical studies, a precise diagnosis is essential for effective management models when treating disorders.

Just as Drucker wrote and applied turnaround methods for companies worldwide, part of good management practices consists of having a clear vision for the future, not being short-term oriented, and properly planning how this process of change should be developed. Despite skepticism that the state will never benevolently adopt this subject more seriously and emphatically due to not being aligned with these agendas, we need to continue discussing this topic among citizens so that we are not dependent on the goodwill or ill-will of others, adopting a Talebian antifragile⁹ stance, acting independently with or without institutional support.


Building a Future of Savvy Savers


In this essay, we discuss why it is important for the nation to have a saving culture, but also address that to have a saving culture, it is necessary to contain bad inflationary practices by the current economic model, where citizens need to know if they are being sabotaged or not. Additionally, we were able to discuss the role of the state and private initiative in promoting this culture and how all of us can create a better future.

With the advent of Central Bank Digital Currencies¹⁰ (CBDCs), physical money is expected to intentionally disappear, while the printing of money increases through digital currency, leading to inflation. Discussions like this have prompted a large percentage of young people to start initiatives on how they can save money without being affected by the devaluation of local currencies. They are doing this in a decentralized manner using Bitcoin¹¹, or for more conservative investors, tokenized gold¹².


By adopting a plan to incentivize a saving culture, we can reduce poverty, trade with more stable currencies, better discuss phenomena like inflation, and promote changes in economic models for everyone.

We can conclude that in the realm of financial education, regardless of one's background, achieving a high grade is essential to navigating life's challenges. To change the status quo, we must adopt more than strategy; we must adopt a cultural shift.


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References:

1: 59% of Americans live paycheck to paycheck according to CNBC.

https://www.cnbc.com/2023/04/11/58percent-of-americans-are-living-paycheck-to-paycheck-cnbc-survey-reveals.html

2
: Kakeibo: The Japanese art of budgeting and saving money.
https://www.chase.co.uk/gb/en/hub/kakeibo-saving/

3:Japan adopts negative interest rate in surprise move

Japan adopts negative interest rate in surprise move - BBC News

4: Meritocracy, Personal Responsibility, and Encouraging Investment: Lessons from Singapore’s Economic Growth Miracle
https://www.fraserinstitute.org/studies/meritocracy-personal-responsibility-and-encouraging-investment-lessons-from-singapores-economic-growth-miracle

5: Compulsory Savings In Singapore: An alternative to the welfare state
st198.pdf (ncpathinktank.org)

6:What is Shrinkflation? Everything to Know About This Sneaky Cost Increase
What is Shrinkflation? Everything to Know About This Sneaky Cost Increase - CNET

7: Drucker, The Unseen Revolution, pp. 114-15.

8: Book: "The Practice of Management," Peter Drucker, Chapter: 15, Pages: 187-205

9:Taleb, N. N. (2012). Antifragile: Things That Gain From Disorder. Random House.

10: CBDCs, Bank for International Settlements, 2021. https://www.bis.org/cpmi/publ/d174.pdf

11:Bitcoin
whitepaper
https://bitcoin.org/bitcoin.pdf%5B1

12: Tokenized Gold whitepaper PAX-Gold-Whitepaper.pdf (paxos.com)

Graph about singapore personal savings rate ip-e49.pdf (singstat.gov.sg)