There is a(nother) crisis building these days and it is the United States' low national savings rate - the amount we save minus the amount the government borrows. But no one wants to talk about it. At least no one in power is talking about it…it’s not a popular subject.
From 2002 through 2004, the rate of national savings was lower than at any time since 1934. Tax cuts are driving the swing from budget surplus to budget deficit that we have seen over the past four years. Currently, the deficit offsets most of the economy's net private savings.
Also, individuals don’t save enough, as reflected in the widespread inadequacy of retirement savings. Some would argue that the amount of personal savings is understated because it does not take into account the increase in housing values, which has many homeowners feeling like one of the rich and famous. But increased home values do not add a dime to national savings. This “House Wealth” is not converted into cash until the house is sold, and at that point the money flowing into the sellers' pockets is simply money that is flowing out of the buyers' pockets. It’s the same money! No new wealth is created unless a seller saves the windfall – do you know many who have done that? And why would you want to save when the interest rates paid for savings are so low? And do you actually have any money left over to save?
On the last question; if you’re a member of the vast middle class, of course you do. It’s all a matter of priorities. If you don’t have any priorities, you’re rich. If your priorities are fixed, (rent, food, etc) you’re poor. Only the middle class has to worry about their priorities and they aren’t. And where’s the incentives?
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