Modern macroeconomic theory is designed for the intellectually challenged, structured so that it can be understood by everyone and anyone. With a seems-reasonable level of 9, no one gets away without coming to terms with the idea that higher demand means higher employment. So obvious is this that the only way you can miss it is if you actually watch demand management in action, or read absolutely any economics text published before 1936. There you would find the very notion of raising demand as the route to higher growth as the most basic fallacy of them all. Only the most desperate could believe anything so dumb. The true mark of an economic illiterate.

And in that same pre-Keynesian literature there was universal recognition that the higher the level of saving, the greater the future rate of growth. As they used to say in the Orwell household: more saving, good; less saving, bad. Even now, in our less enlightened economic times, we can still get the occasional recognition that I=S. Once it was understood that the more S, the more I. Now, through various Keynesian deformities, we argue the more S, the less I. That is the difference, and it is no more deep than that.

So here is the problem that has just been uncovered. The older one becomes, the less one spends and the more one saves. In a pre-Keynesian world, that would have been seen as a good thing. But that is not our world. So, to go to yesterday’s editorial in the AFR, When savings are for spending too. And there we find the problem that has been identified. Those who are retired and sitting on their superannuation are not spending their money at a rate fast enough to suit the government.

CSIRO findings this week showed many have as much money when they leave this mortal life as on the day they retired.

Since no one’s date of departure is pre-ordained, it is mere prudence to ensure that the money lasts. So, in the mind of researchers at the CSIRO (at the the CSIRO!!!!!!!! for heaven’s sake), we have a problem:

Because most super earnings are tax free and most retirees receive the age pension, policymakers would prefer super savings to be spent rather than saved to pass on to children. Government research has found that even in the last five years of their life many pensioners either increase or maintain the value of their assets.

Is there no one around to set the government straight? Is this really the kind of advice they are depending on? Do they really want to diminish our already depleted national savings? The government wants that money for itself so that it can blow it, rather than leave these savings in the hands of the elderly who not only don’t blow it themselves, but spend less than they earn. And although they want the money, they dare not raise taxes on inherited super, which would at least fix the particular problem they are worried about.

Bizarre world we live in, made all the more bizarre by the economic theories used to explain how things work.