America's Saving Spree - Crime against the Economy

Saving and paying down debt is a 'crime' you may do in good conscience

by: bonnie alba | published: 03 20, 2009

Americans have retreated from wild spending to prudent saving for a rainy day. Bad for the economy and government, good for America. Or, is it? Many economic experts and our government have encouraged us to go out and spend!

What 's wrong with saving? Remember last year when we received those pithy $300 checks in our mailboxes? The economy was suffering so the politicians decided we needed a bit of a stimulus. That small amount was a part of our hard-earned earnings returned to us by politicians who believe it's their money. All I could think was "This is supposed to cause us to spend?"

As of January 2009, the personal savings rate approached 4 percent, the highest in decades. Americans have gone on a savings spree. Many people are living a prudent lifestyle for the first time in years. The higher savings rate includes paying down personal debts.

Historically the personal savings rate reached a plateau of about 11.5 percent in the early 1980s. From that point, personal savings steadily decreased almost 11.4 percent by the end of 2007 to less than 1 percent. As seen from the St. Louis Federal Bank chart (Chart: research.stlouisfed.org/fred2/series/PSAVERT/112/Max), Americans have always digressed from spending to saving in every recessionary economic downturn.

A recent AP article stated that "Americans are rapidly shifting from spendthrifts to savers, 'slowing the broader economy' as they remain wary in the face of rising layoffs." As if it's a crime to save?

That is broadly disingenuous, to say the least. Americans are not the cause for the economic recession. People are doing what is wise and sensible in times of uncertainly. Saving is a consequence of a recession, not a cause.

Many variables are involved in creating an economy, including a strong manufacturing base, productivity of worker-producers and end products. Yet the Commerce Department claims that consumer spending makes up 70 percent of our country's economic activity. What happened?

Our manufacturing base has grown weak as many of America's once-patriotic companies moved their manufacturing operations overseas. Let's not forget that productivity produces products. Where are they?

The Federal Reserve, who manages and controls the U.S. money supply, and the over-regulating, taxing politicians are the responsible parties. Add the banking and loan industry who also bought into the political game and fell into the quicksand of government-encouraged mortgage lending to Americans who couldn't possibly afford increasingly out-of-sight home prices. Also, don't disavow the Big Unions' roles in the decline in our economic strength.

Americans' only crime is believing economic experts and government -- spending themselves silly and piling debt upon debt with little to no savings. The "debt is good" mantra is still proffered by progressive economic experts as a wise choice even though our commonsense tells us the opposite.

You've heard the adage, "What goes up must come down." According to the natural law of gravity, shoot a bullet into the air and it will come down somewhere.

The government is acting against gravity by attempting to prop up what needs to fall. They are busy building a debt tower to the next galaxy. Overriding historical wisdom, politicians are reacting without learning from economic history, as if the only wise choices are spending and building debt. They're spending enough for the next five generations.

Whether we experience a short term or long lasting recession-depression, many citizens will learn to live the rest of their lives within their means. Others will return to spending themselves into debt, resuming their compulsive buying habits.

Preparation

In the 1950s, my grandmother allowed Sis and I to play with an old coffee tin full of coins consisting of silver dollars and half-dollars. We sorted and counted them, looked at the dates, then returned them to the tin to be placed back on the kitchen shelf. Some of them were old, minted in the late 1800s and early 1900s. Grandma called them her "rainy day savings." I call it preparing for "just in case."

Americans are smart when they tighten their belts and choose to live within their means. To prepare, as much as one is able, for that possible and sometimes foreseeable "rainy day" is a sound and sensible choice. Counting on government to save us, you might as well wish for apple pies to rain from the sky.

Saving and paying down debt is a 'crime' you may do in good conscience.

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