Savings is explicitly idle money. Illiquid holdings are very different from cash that can deployed immediately. You certainly don’t hold 100% property and by definition that unspent money is savings.

Savings can certainly be used to purchase securities, commodities, property, but then it’s no longer savings and is an investment.

Savings is not idle money. Savings is stored value. Currency is an intentionally lossy short-term store of value designed to incentivize allocation of capital into long-term savings vehicles like stocks, bonds and real estate that are productive and help the economy.

Idle cash hurts the economy. That's why even in a savings account, idle cash isn't idle, it's collateralizing loans. A savings account is more of a bond than it is currency. As such, in your model, money in a savings account is an investment - not savings. In your model the only thing that would qualify as savings would be literal dollar bills stuffed under your mattress.

Liquidity is a different axis.

And as for myself, I hold more than 100% of my net worth in assets, the cash in my bank account is borrowed against my asset portfolio.

This is also an extremely common position for anyone with a mortgage to be in.

Idle money is literally the definition of savings:

- https://www.investopedia.com/terms/s/savings.asp - https://www.wellsfargo.com/goals-investing/saving-vs-investi... - https://financial-dictionary.thefreedictionary.com/saving

I agree that fiat is intentionally lossy. I also have no problem with the idea of my idle money being, in fact, borrowed out at no risk to myself (and at recent interest rates there wouldn’t be much difference between sticking it my cushions except for the insurance provided by holding in a bank). From the saver’s perspective, it’s idle.

If you are holding more than 100% of your total net worth in assets, the cash in your bank account isn’t yours, nor is anything else above that 100%. As a borrower inflation is a great way to take advantage of that position. I have mortgage debt for exactly the same reason. Mortgage debt, however, is typically net worth positive (except for 2008-2014), so I doubt most people with mortgages are leveraged higher than their net worth. In most cases market value of a house is greater than mortgage debt a few years after the loan is made.

Again, using your definition, savings must be limited to cash, physical cash, in a mattress. It cannot be even in a checking or a savings account as those are technically variable-coupon perpetual bonds. [1] CDs are bonds too. The only reason they're not listed as bonds is there is a carve-out in securities law that if they're issued by banks, they're exempt from registration. They're not really zero risk, because in theory, the FDIC could go under. They won't but for the purposes of our discussion, a bond or bond fund in a brokerage account is the same as a savings or checking account. So then why is one "savings" and one "investment?"

> From the saver’s perspective, it’s idle.

That's just a fun illusion, not a useful or meaningful distinction.

> If you are holding more than 100% of your total net worth in assets, the cash in your bank account isn’t yours, nor is anything else above that 100%.

Nope, it's mine - because the margin loan is collateralized by the contents of my portfolio. The cash that comes out is separate. Nobody has a claim on my cash but me - if there's a 90% drawdown across all markets my portfolio will be liquidated to cover, but the cash will remain mine.

According to investopedia the only real difference between savings and investments - as they view them - is liquidity, risk profile and time horizon. All of which you can achieve in a brokerage account by constructing your portfolio to meet your goals.

The thing is, saved currency will go down in value unless deployed because the point is to save your value. You can save your value in all sorts of ways, but currency ain't it. One keeps a small cash cushion in the event of emergencies, but you're paying a premium for that liquidity (inflation - interest).

[1] https://www.youtube.com/watch?v=5QgKM8MtbBQ

From your link: “income that is not spent on current consumption.”

Income is not limited to money, you can do something and be paid in physical goods. Either indirectly by being paid in them or directly by at making them ex: canning tomatoes you grew.

I agree with that. In that case savings would be the goods that remain unused or at least left in a condition that did not put their value at risk (e.g. eating the tomatoes). A properly canned food can be a great store of value for a decade or longer and is a hedge against inflation, however are suboptimal after a point due to their volume and mass. An entire pantry may be the equivalent value of one oz of gold, for example, though with more immediate utility.

You think in terms of money because that’s what your paid in, but for subsistence farmers who never deal in money it was the excess physical harvest etc.

Where investments differ is the possibility of returns above what was saved. A pound of gold is still going to be a pound of gold in 1,000 years, but land can provide rental income so you still have land but now you also have money or what or whatever.

What muddled the water is people used to have savings accounts that provided interest above inflation.