Aren't there two questions here? If Bill Gates built on a spending spree with Warren Buffett, they might make a dent on the savings rate. If two working stiffs get a drink, they won't.
On the other hand, if some working-class guy gets a subprime loan, it might not make a big change in the savings rate, but if too many poor people get over extended, I don't think that they economic affect would be negligible. On Tue, Feb 06, 2007 at 10:00:51AM -0500, Doug Henwood wrote: > On Feb 6, 2007, at 9:47 AM, Jim Devine wrote: > > > the phrase "outbreak of prudence" is a bit off. at the lower levels of > > income, low saving rates result from the pressure of needs and social > > obligations on income more than from a lack of prudence. > > Oh really? I didn't know that. > > The decline in the savings rate has mostly happened above the median, > probably considerably above. Since they have about 80% of total > income, that's really not surprising. The top quartile has about 60% > of income. That's where the presence or absence of prudence is an issue. > > Doug -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
