Thursday, August 5, 2010
The newest report is that the savings rate is up but personal spending is unchanged. It looks like people know what to do even if the government doesn’t. A higher savings rate is good. A higher savings rate means more money is available to lend. That is what banks do. It gives a lie to the Administration’s constant statements about the lack of credit availability. Credit is available. The Administration just wants to go back to when the availability of credit meant that anyone who could fog a mirror could get a car loan or a mortgage. That is what caused the problem in the first place. The real problem now is that people/businesses don’t want to borrow in the face of uncertainty. Uncertainties like: How far up are taxes going to go for individuals and businesses? What will this health care thing cost? Will it be profitable to hire another employee? What is the next thing that this Congress will do to redistribute income?