[lbo-talk] question on savings

Lou Johnson loujohnson705 at yahoo.com
Fri Feb 11 20:08:22 PST 2005


I've been reading quite a bit lately about the US "lack of savings", as in the following from le monde:

"The United States considers itself innocent: it refuses to admit that it lives beyond its means through weak savings and excessive consumption."

I've also read that the average consumer has a certain debt overhang, etc.

Yet I always understood economic bubbles as produced by "savings" (excess $) with nothing productive to invest in. And currently, I see real estate bubbles, stock bubbles, art bubbles, rare book bubbles, e-bay bubbles, etc. Seems like recently some on-line gamer bought a virtual island for something like $25,000, for god's sake!

So my feeling was that it wasn't savings per se, but the fact that available savings was concentrated in too few hands.

Am I wrong? Could someone explain this "savings" thing?

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