A nation of savers?

April 28, 2009

Something Charlie Rose said while interviewing David Brooks got me thinking:

“Time” magazine said that Obama is betting his
presidency on our ability to change — our ability to change our behavior.
That he has some confidence in our ability to change. The big idea is, can
we change from consumption to savings?

It sounds plausible, and achievable, considering we’ve already adjusted our habits drastically during the downturn.

So why would this be a good thing?  Because it would…

  1. Support demand for Treasuries which lowers offered interest rates.
  2. Reduce the crowding-out effect of the expanded national debt on domestic private investment.
  3. Lessen the fiscal impact of prolonged deficits, as larger portions of interest are paid to domestic debt holders and reinvested in the U.S. economy.
  4. Dampen demand for Chinese products, which would cool their growth and reduce our trade imbalance, and delay the coming about of their middle-class as the principal economic force in the world.

One Response to “A nation of savers?”

  1. Thanks for the info. With all the bad information we get online with crazy credit websites, it is good to read something from someone who knows what they are talking about.

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