Our economy is really screwed up

[UnknownXV]

Not surprising in a culture that condemns saving and conservatism, and encourages reckless waste and spending.

[dawnwes]

A new car salesman told us last week that 90% of the applications for loans he sees have credit scores in the 500s and 600s.

[disneysteve]

A new car salesman told us last week that 90% of the applications for loans he sees have credit scores in the 500s and 600s.

That explains the reaction we get when we walk in and they see we both have scores in the 800s. The last time they joked and asked if we didn't want to buy 2 or 3 cars.

[bjl584]

Most economic indicators focus on people spending every dime that they make. There are a few that look at peoples' savings rates, but not too many people pay attention to them. Consumerism and debt has always trumped saving and frugality to an economist.

[disneysteve]

Most economic indicators focus on people spending every dime that they make. There are a few that look at peoples' savings rates, but not too many people pay attention to them. Consumerism and debt has always trumped saving and frugality to an economist.

One thing I never totally understood about savings, though. That money that I save doesn't just sit in a vault somewhere. It circulates in the economy, doesn't it? If I buy stock, for example, the broker earns a commission and someone on the other end of that transaction has sold the stock and gotten money. If I put money in the bank, it gives the bank more money that they can lend out for auto loans or mortgages. And some of it must go to pay their employees and their expenses. Unless I do all of my savings by stashing money in my mattress, doesn't it also support the economy?

[UnknownXV]

One thing I never totally understood about savings, though. That money that I save doesn't just sit in a vault somewhere. It circulates in the economy, doesn't it? If I buy stock, for example, the broker earns a commission and someone on the other end of that transaction has sold the stock and gotten money. If I put money in the bank, it gives the bank more money that they can lend out for auto loans or mortgages. And some of it must go to pay their employees and their expenses. Unless I do all of my savings by stashing money in my mattress, doesn't it also support the economy?

Yes that is how it works, and in a more stable economy without much (or any) central bank interference, the saving trends of people determine interest rates. They're low when people save a lot because there is simply more money to loan out, and they're high when people aren't saving because there's less money to loan out. It's simple enough. When that critical interest rate is distorted, it causes a whole range of problems in the economy.

We seem to live in an economic model of eating our cake and having it too. I think it's very shaky and dangerous. I don't like it. Too much artificial stimulus and not enough sound, genuine savings. It's very dangerous.

[Weird Tolkienish Figure]

Our economy is really screwed up, but if you don't screw up yourself, have a decent head on your shoulders, don't buy a 5 million dollar home when you pull in 50K a year, don't take buy hot tubs on credit, etc. I still believe that you can do better than most people in the world. No where else that I would want to live.