Doug Henwood dhenwood at panix.com
Sun Oct 1 10:45:34 PDT 2000

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.


More information about the lbo-talk mailing list