whee!

[Doug Henwood]

Anita Mage wrote:

>But seriously, in an economic system in which savings and investment
>overwhelmingly benefits the owners of capital, when income is rising
>doesn't it make sense to spend some of the increase?

Yeah, but it being capitalism, if "you" consume too much (leaving 
aside all questions of the analytical unit for the moment) then you 
run up big debts or run down your stock of savings, and at some point 
the bill collectors start acting threatening. Of course, this being 
the U.S., it's a bit hard to imagine what collection agency is going 
to make the calls.

I think what the negative aggregate savings rate means is that upper 
income households are coasting on their stock gains, and not saving 
out of current income, and middle and lower income households are 
borrowing more. Since the domestic economy isn't generating the 
savings to fund these excesses, the difference is borrowed from 
abroad. Again, this doesn't have the ring of a long-term strategy 
about it, but again again, who's going to call an end to it and how 
is the $64 billion question.

Doug