Posted on 03/05/2009 1:46:48 AM PST by TigerLikesRooster
Banks save while U.S. Consumers are Expected to Spend: The Convoluted Problem of Creating a Debt based Consumption System.
I’ve read my fair share of financial books and I am certain that many of you have picked up a book regarding finances. Many times, these introductory books caution the reader that going into massive debt is a sin (or at the very least a hindrance to your financial independence). These books will usually show you the contrast between a dollar saved and compounded over time instead of someone burning that dollar on a trip to Las Vegas. The underlying premise is simple. A dollar saved is a dollar earned. This important caveat has been missing for many decades in the U.S. People sometimes forget that in order to become wealthy, you actually have to save your money instead of consuming it. Is it any wonder then, that the U.S. Treasury and Federal Reserve trying to liquefy the system with access to credit, causes extraordinary confusion with most Americans simply trying to manage their finances?
To borrow a word from a former champion of easy credit, that is the conundrum we now find ourselves in. Recent data for January showed that the personal savings rate of Americans jumped up to 5%. This is the highest rate since 1995. This should be good news right? After all, saving money is espoused as a virtue of the highest order in 90+% of most over the counter financial books. Before we argue the merits of this, let us first look at the personal savings rate over time:
Ping!
Until the US begins in earnest to restore its manufacturing base for everyday goods, the foundation for a positive solid economic turnaround is non-existent.
Also, the hedge fund derivative CDO CMO CDS 30:1 leveraging schemes is still in place with 0 changes that allowed the unmitigated global credit - skim bubble.
What is not being revealed is that a $2000/mo minimum standard of living in the US where rice is $2/lb cannot compete in an open with Chinese labor @ $200/mo minimum SOL where rice is $0.20 / lb.
Banks save
The bail-out and stimulus money will be hoarded until their are tax cuts for the rich
I’m sorry. Please forgive me. I’m just not into spending right now. About a year ago I started concentrating on paying down debt. It’s nearly half of what it was.
I have everything I need. My one bedroom apartment serves my needs. I have over 300 books in my library - mostly history with some anthropology - 2 TVs, one in the living room and one in the bedroom. My laptops may be a couple years old but still good. I drive a 12 year old car that does just fine. What more do I need? Someday I might breakdown and buy an HD TV, but I’m still waiting for my old TV to die and for the prices to drop more.
When doing laundry I discarded worn out clothes - too many holes. I had to breakdown and spend a hundred bucks on clothes - 2 pair of slacks, 1 shirt and several pair of socks.
Try good thrift stores. You can get top quality brand clothing for pennies on the dollar.
That’s where I had been buying - at the DAV. This time I used the PX.
I just don’t like “shopping”. My late wife usually did it for me, but she died 8 years ago today.
Bad anniversary.
Why do I suspect that this number: Recent data for January showed that the personal savings rate of Americans jumped up to 5%. This is the highest rate since 1995.
Does not feel like savings to some of the people saving money. I suspect that some of that increased saving rate is people who are making their payments but are simply unable to take on any more debt. i.e. they “saved” $3000 by reducing their debts by $3000, so they still have no money on hand.
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