Monday, January 30, 2006
U.S. savings rate hits lowest level since 1933
How come politicians are not concerned about the lowest rate of savings in our country since 1933? Americans spent more money than they earned last year! Macroeconomists will argue that the trade balance is really a function of savings. Yet our politicians are vaguely aware of this. Yes, they are concerned about the trade imbalance with China and the artificially low value of the Yuan versus the Dollar. Importation of foreign petroleum has also fueled the trade deficit. However, we have done little to encourage Americans to save their money. I think it is hilarious that Senators and members of the House of Representative who are responsible for appropriating government money do not even pay their young staffers enough money for them to start a decent savings account. Low rates of savings mean that the nation as a whole finances it debt from overseas to buy foreign goods. We can complain all we want about oil prices and Chinese economic policies but if we are unable to get a hold of our own spending habits than who should we really blame?