Doug Henwood wrote:
> Pension contributions are counted as savings, but unrealized gains of
> any kind aren't - and there's good reason for that. To paraphrase
> Keynes, savings and investment are two names for foregone consumption
> - a diversion of income and production from the present for future
> use. Unrealized capital gains are purely fictitious values. To
> "spend" them, the money has to come from somewhere in the present,
> which generally means borrowing (or income that would otherwise have
> been saved).
>
> With the market down, I suspect we'll see a lot less of this argument.
.
The Bank Credit Analyst study was talking about *realized* capital gains. Its point is that household saving numbers are derived by subtracting spending from income, but household income is understated for two reasons: realized capital gains aren't included; and higher bull-market pension benefits aren't counted (only corporate contributions).
Seth