Saving soon to be devalued dollars is one way to dispose of one's personal income, certainly.

There is no net saving taking place. The government is borrowing much more than the taxpayer is producing and saving.

We continue to get poorer.

The only reason the savings rate is up is because no one is paying capital gains tax anymore. This number is so flawed it is a wonder anyone with a brain uses it.

Income-Expenses-Taxes=savings rate.

Doesn't count 401(k) as savings (this is probably true now). Doesn't count capital gains as income, but counts the capital gain tax as a deduction...

Love the government numbers that mean nothing.

The five weekends (and fridays) in may are going to play havoc on june's consumer spending # 's.

unqualified,

I actually think the govenment's definition of savings has merit. Unrealized gains are not savings. One cannot count future income from stocks , bonds or real estate which might not materialize as savings.

Price is what you pay, value is what you get. Too many paid too much for too little value. Many now see that our future is going to be smaller than they anticipated just two years ago - hence the huge decline in perceived wealth. No way can unrealized gains based on assumed future revenue streams ever be considered savings in my book.

That may be so, but to not count the single largest savings vehicle in US, the 401k, seems a bit senseless...

This number was good when there weren't qualifed plans and when savings actually went into a "savings account."

Wealth redistribution is contributing to personal income? What about this line from the report? Green shoot?

"Private wage and salary disbursements decreased $12.4 billion in May, compared with a decrease of $0.7 billion in April."

Most Americans have never ventured far from home, and a visit to Canada or Mexico is about as daring as it gets. They know the lingua franca of the Yankee dollar, and nothing else.

Keep in mind that the people that got religion and are saving dollars like so many Elmer Gantry's saving souls, represent that rare bird in America nowadays-people with money, not debts.

When they get wiped out is when the fireworks show really gets going...

My comment still didn't post. Too much trouble Bye.

How many more American Recovery and Reinvestment Act checks are to be distributed, and when?

The savings rate is the allocation of current income, not net worth.

Have they switched out Jacksons yet on the twenty?

josephprice (profile) wrote on Fri, 6/26/2009 - 6:35 am

What America need now is a wealth tax. I propose 1% a year on net asset value above 2 mm

To recapture all the changed (tax avoidance) behavior by the rich I mentioned previously.

Your proposal sounds almost word for word the argument used with the introduction of the first income tax. Small and only on the rich.

One dollar coin is 2 mm.

What America need now is a wealth tax.

Or we could just stop propping up asset values.

This says it all if you ask me:

Private wage and salary disbursements decreased $12.4 billion in May, compared with a decrease of $0.7 billion in April.
Goods-producing industries' payrolls decreased $12.9 billion, compared with a decrease of $12.2 billion; manufacturing
payrolls decreased $9.8 billion, compared with a decrease of $4.9 billion. Services-producing industries' payrolls
increased $0.5 billion, compared with an increase of $11.5 billion. Government wage and salary disbursements increased
$3.9 billion, compared with an increase of $5.7 billion.

What's rising? Income recipients of govt. social programs?

Puh Lease.

Until we reduce debt by drastic amounts among all walks of life and society and govt., fuggedaboutit.

bbartlog +1
Benefits plan? Heck, Krugman hasn't had a bad word since he sold out for a roast beef dinner.

I still think Krug had "O" splaining' to him the value of positive thinking and speech....a la Deniro in dinner scene from "The Untouchables". A Louisville Slugger is a mighty powerful tool for persuasion.

bbartlog

I have all that Benthamite utility stuff....but the marginal enjoyment of each dollar is greater for the poor than the rich

However the real story is that both wealth and income inequality have become so extreme that they threaten the sustainability of democracy

It is either redistribution, revolution or plutocratic tyranny

I am happy with of the first two
two

It has to go up when they double the amount of dollars....the problem is that they don't mention the value of said dollar is cut in half.

"The wealthy save money, ..."

Which is also to say they invest money.

I still think Krug had "O" splaining' to him the value of positive thinking and speech....
Money Man, I think you're right.

They may be giving it to them in deposits but at least they are not taking it FROM them at 15%.

Once again the term Stimulus is not exactly what it is. Saving growth is more indirect banking back stop. Ma & PA savings account is starving with a .5% return and banks are lending at high consumer rates of around 8-9%. More Banker bail out anyone?

shill-

The bottom portion of that post is the real news IMO:

For anyone who wishes to back into the Indirect Purchases calculation from last week, this is the best data. Something tells me the ratio of weekly increase as disclosed on H.4.1 compared to the Indirect Holding table will be around 20%, meaning the Treasury is fudging the Ind Holdings calc by about 80%!

Yesterday I questioned the blog across the curve with the story that they ran about the changes in the rules for classifying and indirect bidder. Now you wouldn't want to change the rules in front of the largest auction ever to skew the results. The response I got was basically: you have no evidence. But it got better...the end result was that John (owner) worked with people at the treasury and they are fine upstanding people....and would never do anything like that.....

Sure they are.

Ciao
MS

Which is also to say they invest money.

Sure they do...in treasuries, in CDOs, in credit default swaps, in derivatives of every shape and color. It's the accumulation of assets far beyond the availability of productive investment opportunities giving an adequate rate of return that's gotten us where we are.

but the marginal enjoyment of each dollar is greater for the poor than the rich

True that... I'm not opposed to redistribution, but you're proposing a very different reason for it now, no? Marginal enjoyment is a very different foundation than the velocity of money. I could go for the negative income tax that Friedman proposed way back when.

Yep, increase that 'savings rate' (earning .5%/ compounded monthly) while still owing on your credit cards (@ 18% or HIGHER/ compounded daily)!
Path to wealth is what that is.

If you think of money as a unit of 'work'. As it should be...then you begin to understand how concentrating and storing this 'work' in less overall productive or tangible areas of the larger economy(financial sector) is bad for everyone.

This hoarding of work and placing it in largely unproductive areas of the economy instead of infrastructure like roads, telecommunications, power distribution,etc. are foolish and unsustainable.

This folly is being compounded by the actions of the Federal Reserve who are supposed to know better.

Excellent article for CR readers from the Independent:

"A group of pensioners has been accused of kidnapping and torturing a financial adviser who lost over €2m of their savings. "

Leaving Facebook... | Facebook

Someone should be selling the movie rights to this for Eli Roth's first movie. First movie: "Hostel", torturing American male college students. Second movie: torturing American female college students. Third movie: torturing American bankers.

Who needs Quentin Tarantino making movies about Jews scalping Nazis in France when you have this.....

LMFAO...

" bbartlog (profile) wrote on Fri, 6/26/2009 - 10:04 am

but the marginal enjoyment of each dollar is greater for the poor than the rich

True that... I'm not opposed to redistribution, but you're proposing a very different reason for it now, no? Marginal enjoyment is a very different foundation than the velocity of money. I could go for the negative income tax that Friedman proposed way back when."

The "negative income tax" to which you refer exists today as the Earned Income Tax Credit:
Earned Income Tax Credit (EITC) Questions and Answers

As for the marginal enjoyment thing, there will always be poor folks. They're just the people at the bottom of the income ladder. As long as a social safety net keeps them from starving in the worst of time, then fine. Giving them money, etc. doesn't buy the economy as a whole that much because the things they really need such as food and clothing just go up in price due to increased demand. It's much like government programs to make college more affordable have placed onerous debt burdens on many college grads; they've in effect made college less affordable.
The key is to have policy encourage a larger pie. Keynesian redistribution generally results in a smaller pie, and as such has been discredited, though there's apparently been a generational shift where a lot of young folks don't remember that, and a bunch of liberal college professors continue to teach his discredited theories as though they were true.

This is great. I'll be going to bed tonight here in Asian with happy thoughts of Germans torturing American bankers. This fills me with deep joy.

bearly,

Zimbabwae had a lot of other bad things going on besides money printing, including confiscation and redistribution of property and farms, severe loss of productivity, a brutal dictatorship, etc. So, GDP goes toward zero and people lose all faith in government and the government backed currency. Hopefully, we won't see those dynamics here.

" Black Star Ranch (profile) wrote on Fri, 6/26/2009 - 10:16 am
"Of course, it can also be a disaster, but we'll have to wait and see."
......the only question then is - when will you be opening your eyes?"

Perhaps when it really affects me. We had a layoff at work, but I survived. My sister-in-law got laid-off, but they're pretty well off without her income, and I live in an area hit not nearly as hard as SoCal, Vegas, FL, etc. I've got my chickens (3.5 mos. till we start getting fresh eggs), goats, garden, etc., and essentially no debt. I thought you said you were well positioned. No?

Cinco-X (profile) wrote (in reply to...) on Fri, 6/26/2009 - 2:04 pm
reply Ignore user
" Outsider (profile) wrote on Fri, 6/26/2009 - 10:02 am
Wouldn't the fed reignite inflation just by printing more $$? Is that difficult to do?"
They been trying, and it so far hasn't worked.

The inflation worked. It is the economic growth that did not work, because Bernanke does not understand that inflation does not equal real growth.

OT A little more of UAW buying Obamas auto BK. This is what should happen in a straight forward honest BK but only happens to non union folks.

freep.com | | Detroit Free Press

Giving them money, etc. doesn't buy the economy as a whole that much

One guy wants to pretend that anything that makes GDP go up is good, the other wants to anthropomorphize The Economy (and then somehow I'm supposed to care more about Mr. Economy than, you know, actual poor people...).

"Plastic is fantastic, Net Net"

One wonders what totally contradictory (to logic) and misleading items are hidden within that "savings rate".

"I only have a garden at this point.
Looks like I am not going to get the ducks I wanted for my birthday today."

If you're not near water, you might want to think about Muscovy ducks- just my opinion...

It sure looks like the Temple of Mammon is falling. But ever since 1860's Civil War Americans did have a helluva lucky run, didn't they? Nobody bombing the shit out of their cities, nobody invading, basically just one happy disneyland, compared to the rest of world....

" timmyone (profile) wrote on Fri, 6/26/2009 - 10:26 am

It sure looks like the Temple of Mammon is falling. But ever since 1860's Civil War Americans did have a helluva lucky run, didn't they? Nobody bombing the shit out of their cities, nobody invading, basically just one happy disneyland, compared to the rest of world...."

Folks,
We're still far from the end game. While our SoL will undoubtedly go down, we still don't know where we'll end up in relation to the rest of the world yet. We still could end up with the most toys; just fewer of them... gotta go

we will not monetize (homepage, profile) wrote on Fri, 6/26/2009 - 2:09 pm
If you think of money as a unit of 'work'. As it should be...then you begin to understand how concentrating and storing this 'work' in less overall productive or tangible areas of the larger economy(financial sector) is bad for everyone.

The bottom half is more likely to buy cigarettes and lottery tickets.

The wealthy save money, ..."

Which is also to say they invest money.

And lately they've been investing it in neg-am mortgages and credit card debt.

"And lately they've been investing it in neg-am mortgages and credit card debt."

So, there's the wealth redistribution.

We agree. My major gripe lies with peoples' fanciful notions that wealthy people could never deserve their money. I have clients that have worked and failed on projects that took years. Then, in their late 40's, they hit it big time, made enormous profits and sold out for $100s of millions. Their technology will lower health care costs more than any giveaway Congress has planned.
Now their at it again, starting another high-tech company. It sickens me that these guys are loaded into the same category as John Thain for political purposes (except they never needed a bailout).

Americans Finally Look out for themselves, and saving surges - the end of the Shopaholic Nation?

Fund My Mutual Fund: US Savings Rate Surges to 6.9%; Spending Up Too But Government Assisted

lama, I'm just saying that it was inaccurate perceptions of risk/reward that got us into this mess.