The Savings-Rate Myth (Bogus assumptions based on a bogus government statistic)

NRO Financial ^ | Dec 23, 2004 | John E. Tamny

[oldcomputerguy]

I see that you have managed to disenfranchise all the people saving for retirement in their 401ks by mischaracterizing them as NOT saving at all.

[oldcomputerguy]

"it's not savings; its not protected."

Bwhahahhahahahaahhahahahahahahahahahahah!!!
A new definition.

[oldcomputerguy]

"Calling these non protected investments savings is naive, and the government calling them such is deceptive. "

I guess that means everyone is calling them savings but you.

[x5452]

While the dictionary definition of wealth is connected with affluence—having an abundance of money, Schuchardt says wealth is “about having enough money to be financially secure. The concept of financial security means you are first, financially independent, or out on your own; then financially stable, or able to meet day-to-day expenses; and finally, able to save, invest, and control debt in order to reach future goals that take money to buy, such as a home, a college education and a comfortable retirement.” Schuchardt, a former senior fellow with the National Endowment for Financial Education, suggests these simple tactics:

http://www.utah.edu/unews/releases/04/mar/wealth.html

[oldcomputerguy]

"Thus when all the babyboomers with 401ks hit that age (I believe its 70) an enormous class of folks MUST begin liquidating their market holdings.Does that sound good for the market to you?"

At age 70 1/2, people must begin paying taxes on the money that has been deferred, yes. That year they must withdraw 1/27 of their money which may be less than they were withdrawing to live on anyway. And they can easily be taking it from their MM accounts which has no little if any effect on market prices.

At the same time money will still be pouring into the markets from their children, so the net effect is not predicable but it certainly doesn't portend disaster either. If their children pour more money in, we have some inflation and the economy grows, prices will still be going up not down.

[expat_panama]

I don't think when discussing saving that the definition of wealth should be structured so that it can hide debt in excess of assets held.

You and the Fed have something in common.  The Fed's Flow of Funds Report that we're all harping about, actually doesn't even mention "wealth".   They use "Net Worth"  --defined as "Assets" less "Liabilities".   That's really what a lot of us were talking about all along.

[oldcomputerguy]

" Schuchardt says wealth "

Yeah well Jane's principals are good alright but they are only one view. Jane also does not have a monopoly on getting to the finish line.

The problem with a cash based life is a low standard of living. Judicious use of credit, both by the individual and the govt, results in a better standard of living for all.

There is a reason why living standards exploded with the explosion of credit. One can argue that credit is seductive but to argue one should avoid it is a limited view in my opinion.