Government Debt is the source of private savings - page 2.

Iseree22

newbie

Activity: 28

Merit: 0

Personal Savings Rate is not the best measure of savings(despite its term).

http://realclearpolitics.blogs.time.com/2007/02/22/personal-saving-rate-is-a-misleading-indicator/

Quote

To calculate the personal saving rate, government statisticians subtract taxes and spending from personal income. Income includes wages, salaries, interest, dividends, rent received, small-business profits, and some government benefits. Excluded are withdrawals from IRAs and 401ks, as well as capital gains. This is inconsistent with how most people measure their private fiscal health.

http://upload.wikimedia.org/wikipedia/en/a/a3/Graphic.png

http://savingjapan.files.wordpress.com/2011/07/us_debt_history.gif
This is a better metric.

Nonetheless, notice the steep increase that coincides with the 800Bill stimulus package of 2009.

AyeYo

full member

Activity: 154

Merit: 103

Sorry, I don't see the connection.

In fact, it seems to be the opposite of what you've claimed. The deficit has increased as the savings rate has declined.

Iseree22

newbie

Activity: 28

Merit: 0

How is it possible for the private sector to save money unless the state first spends? This is equivalent to expecting people to save BTCs without minting BTCs first. Therefore to achieve a high level of private cash holdings the State must first spend.

Deficits lead to more private savings, and Surpluses lead to less private savings.

A Government Surplus means the State has more cash inflows than outgoings, where does this money come from?? Your wallets.

[Edits]

Holds iff the country issues its own currency

Topic: Government Debt is the source of private savings - page 2. (Read 2779 times)