No, the FIRE movement isn’t gonna crash the economy…although maybe it should.

Apparently Millennials1 have gotten too goddam lazy to ruin the country piece-by-piece, because now The New York Times is reporting that they’re bent on ruining the entire economy at once…or at least the Federal Reserve’s ability to manage interest rates, which amounts to the same thing. And they’re using the FIRE movement to do it.

I was hoping for nice interpretive dance piece from the NYT, with maybe some partial nudity, but what they gave me was an editorial from Jeanna Smialek entitled “How Millennials Could Make the Fed’s Job Harder,” subtitled “They love the idea of retiring early. That could diminish Federal Reserve’s firepower.”

Sez she:

A young generation of aggressive savers could leave central bankers with less room to cut interest rates, which they have long done to boost growth in times of economic trouble.


To leave the work force early, millennials would need to build up massive retirement funds and consume less in the process. That hit to demand could slow growth and force rates to drop ever lower to entice spending. And if today’s workers actually managed to retire young, it would exacerbate the situation by shrinking the labor force, further weighing on the economy’s potential.2

Sigh. You know…it’s tiresome to keep hearing, “If everybody retired early, the economy would collapse.” It’s a slippery slope argument; the same ill prophecy we’ve been hearing ever since the FIRE movement first got visible. And if I seem crabby about it, it’s because I hate the idea that people who opt out of consumerism are failing in their civic duty.

A slippery slope argument, as I know you know, is a logical fallacy where if A occurs, Z is inevitable…and since Z is a Big Scary Consequence, A oughtta be refrained from. Does that prove out in the FIRE = economic collapse context? Break it down step by step and see.

Chain of reasoning:

  1. A small number of people will conceive of FIRE and attempt it.
  2. If they succeed, they’ll spread the word.
  3. If they spread the word, everyone will hear about it.3
  4. If everyone hears about it, everyone will want to go for it.
  5. If everyone wants to go for it, everyone will.
  6. If everyone does, everyone will find a way.
  7. If everyone finds a way, everyone will stick to it.
  8. If everyone sticks to it, everyone will succeed.
  9. If everyone succeeds, everyone will stop working.
  10. Big scary consequence of the FIRE movement: if everyone stops working, it’ll crash the economy.

And that’s how slippery slope arguments function: they’re based on assumption and hyperbole instead of sound reasoning.

Smialek’s premise of disaster is a little more subtle than what you usually find. She’s observing that FIRE movement participants tend to be aggressive savers, then framing the “thrift paradox” around the presumption that at some point there’ll be enough of them to make life tough for the Fed.

The thrift paradox is a fundamental principle of the Keynesian school of economics that says, sure, saving money might be good for the individual…but when too many individuals save too much money, it’s bad for everybody because the economy is held together by collective spending. Naturally a lot of things can adversely affect spending, but they all have the same effect: recessionary pressure. This is why, for example, you get stimulus bills during recessions. Households aren’t spending as much, so the government spends extra to offset it.

But the government has more gas in the can: setting interest rates.4 You might already be familiar with how that works, but please bear with me through a quick explanation that’s not to be confused with a dad lecture.

Banks profit in large part by paying less interest than they charge. But banks sometimes make bad loans, and if too many of these loans go bad at once, the bank may not have enough money to pay off its depositors. The bank has then failed. Regulators move in and make everybody whole5 and shut the place down.

When a bank fails it sucks, but when a lot of banks fail at the same time, it sucks HORRIBLY. Bank failure was a major cause of the post-housing bubble recession: they backed way too much bad real estate debt, and when the time came to settle, nobody paid up. Those to whom the banks owed money freaked out and demanded it, but the banks were circumventing their reserve requirements with accounting tricks, so the money wasn’t there.

Reserve requirements are one way the Fed prevents banks from failing: making them keep enough funds on hand to ensure that if their loans go bad, they’ll still be able to return deposits. If a bank’s reserves exceed the Fed’s requirements, the Fed lets it loan the excess to other banks at an interest rate the Fed sets, which enables the borrowing banks to meet their reserve requirements too. This interbank lending rate is called the “federal funds rate,” which is the one you’re hearing about when it’s said the Fed has raised/lowered/maintained rates. A great big whack of the global economy is based on it.

So to sum up the relationship between the thrift paradox and the Fed: when consumers save more and spend less, it takes money out of the economy. Business suffers. The economy falters. The Fed lowers rates. Bank deposits now earn less than before. Money, though, is cheaper to borrow. This gives people an incentive to stop saving and start spending. They do. The recession eases. Everybody goes home happy.

Therein, according to Smialek, lies the trouble with the FIRE movement. The federal funds rate is already as low as shit. When FIRE-seeking Millennials6 lay off spending and start hoarding, they’re running the Fed out of room to cut rates any further and thus making recessions more likely. So maybe saving and being frugal is good for them, but it’s terrible for the rest of us.

But shit-fire, the thrift paradox is beehive thinking at its worst: the implication that what’s good for the hive is good for the individual–which means woe betide the maverick bee who submitteth not to societal policy. But you know who sets societal policy in a beehive? The queen.7 And the queen of a beehive is a fair enough analogy for the plutocracy of mega-corporations and ultra-rich individuals who hold undue influence over our society and, among other things, continually push us to believe that consumerism is virtuous. I doubt Smialek is deliberately acting as a mouthpiece, but she’s nonetheless reinforcing consumerist ideology.8 That’s why I’m concerned about her editorial.

Welp…the idea that it’s virtuous to submit yourself to a plutocracy is waaaaaaaay too close to totalitarianism for my comfort. Last time I checked, the founding fathers didn’t want us to bow down to anybody, especially not the rich and entitled. As Noam Chomsky put it:

[If] you read Milton Friedman and other apostles of so-called libertarianism, they don’t call for democracy. They call for what they call freedom, which is a very restrictive concept of freedom.

“It’s not the freedom of a working person to control their work, their lives, and so on. It’s their freedom to submit themselves to control by a higher authority. That’s called freedom.”

“They’re in favor of private tyranny; the worst kind of tyranny. Tyranny by unaccountable private concentrations of wealth.”9

And there’s an interesting thought: you can make the case that by being anti-plutocrat, the FIRE movement’s also anti-tyrannical and quasi-libertarian and even patriotic. So if we’ve got the power to shove the economy around, maybe we should…and who the fuck is The New York Times to tell us to get with the program?

Don’t ask me. Ask Smialek. Here’s how she closes:

As America’s collective memories of [the severe inflation of the seventies and early eighties] fade, the nation’s younger people have become an anchor that threatens to drag down overall expectations.

John C. Williams, the president of the Federal Reserve Bank of New York, said in a speech last month that “there is still time to avert this fate.” Moving inflation up and keeping it there could convince millennials, he said. “In this case, it’s fortunate that the young are impressionable.”

So there you go, Millennials: the gospel of the Federal Reserve. You’re an anchor around the rest of our necks. It’s convenient that you’re young and gullible, or else you’d drag us under. What you need is a big taste of inflation to keep you in your place by convincing you it’s safest to submit yourselves to a consumer culture that forever prices your dreams beyond your salary. And it’s not us doing this to you, either. You’re bringing it on yourselves.

For fuck’s sake. This whole thing is so stupid and patronizing. If you want to retire early AND do your part to keep the economy healthy, work towards having something to sell besides your time. That’s all it takes.

“They beat your face in, and tell you it was always ugly.” — Alexander Solzhenitsyn, The Gulag Archipelago.


  1. Man…I realize “millennials” is proper, but can I get away with using an uppercase M anyway so I don’t have to bother memorizing all these friggety rules about generational capitalization? I’m a GenX’er, after all, and I find their inconsistency confusing.
  2. There’s that weird fucking capitalization again. I guess if this is how the NYT’s editors are doing it, then I oughtta do it that way too. But I’m not.
  3. Note that we’re at, like, step 2.5 right now. The FIRE movement continues gaining visibility, but it’s still far from mainstream. I’ll believe it’s mainstream when I get to go on Joe Rogan and discuss it.
  4. There’s even more gas than that, but let’s not huff it just now.
  5. Within certain limits, of course. Google the FDIC if you haven’t been down this particular rabbit hole.
  6. There. Capital “M.” See how natural that looks?
  7. OK, it’s really instinct that sets policy in a beehive, but leave me alone…I’m rolling.
  8. Crap. And so am I, come to think of it, with the ads in my sidebar. What am I gonna do about THAT?
  9. Yup. Quoted this elsewhere. It’s cool, as well as ideologically consistent, that Chomsky’s beating up on Friedman, a Nobel Prize-winning anti-Keynesian economist. But Chomsky’s not a Keynesian, either. He’s, like, an anarcho-syndicalist libertarian socialist.

Author: ER Dude

Sick of your job? After a thirteen-year career, Early Retirement Dude fled corporate America for good. You can do it too! Visit or email

6 thoughts

  1. That was a terrible article from Smialek. A complete waste of time on an improbable financial theory with very few counterarguments and massive holes filled with assumptions. You had every right to call it out for what it is.

  2. Same generic reporting I come to expect from the media these days. It has no relationship with core content. This method has become widely used in the social media realms and has created massive distrust.

    Fake News…… is there any real news left?

    1. >is there any real news left?

      Most definitely. Last night my daughter and I went owl prowling and saw two barred owls and a shooting star. Not headline news, but still the best thing I bet you’ve heard so far this morning. 🙂

      1. True that is the best thing I heard this morning. Thumbs up on spending quality time with your daughter. This weekend I spent some time with my daughter making “Leap Day” cupcakes to celebrate the leapyear! Also took my son out for some “on the road” driver training (to help build his confidence). His driver instructor doesn’t seem to allow him to get off the small residential roads, so I took him on a 30 mile trek on some real roads and let him experience some traffic. Even got him to back the car into the garage.

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