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Post by unlawflcombatnt on Jan 7, 2009 20:26:59 GMT -6
Assuming there really is a "savings" crisis, there's a sure-fire way to increase savings.
Reduce credit.
But yet, we're doing the exact opposite. We're trying to "unfreeze" those pesky credit markets.
Just brilliant.
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Post by graybeard on Jan 7, 2009 22:06:32 GMT -6
Agreed.
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Post by blueneck on Jan 8, 2009 5:23:18 GMT -6
Policy has been disincentivizing savings since the late 70's when they decided to tax savings account interest as income. I recognized the problem with this when I was a teen then - it wasn't rocket science. it swung into full gear with Greedspans policy of cheap and easy credit.
There simply was no point in savings when it pays low single digit interest. Inflation and taxes wiped out what little gains were made - you actually lost money if you saved
Current Fed policy of virtually zero interest and "loosening credit markets" is throwing more gasoline on the fire. This very policy is what fuels bubbles and creates negative savings rates as it encourages deficit spending both macro and micro
How can anyone save any significant money anyway with high costs of food, medical, fuel, utilities, rising local taxes, stagnant wages, lost jobs?
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Post by agito on Jan 8, 2009 15:00:16 GMT -6
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Post by unlawflcombatnt on Jan 11, 2009 3:44:18 GMT -6
I agree with some individual points made by the author. But he seems to contradict himself in multiple instances. And some of his claims are just ridiculous. Below is one example. " The taxes to pay for the spending may be in the future, but the effect is felt today as people adjust their behavior to prepare for those higher future taxes. Any stimulus from the spending is mostly offset by the expectation of higher future taxes." The "future expectations" card has been overplayed more than anything else I've ever heard in economics. Most people aren't going to 'spend less today', just because they're preparing for higher taxes in the future. This statement of Calhoun's is ridiculous. Despite making several points I agree with, his overall message is incoherent. What is his point?
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