On Aug 9, 2007, at 10:31 PM, sartesian wrote:
Couple of things... first I don't think the accumulation of US
Treasury
notes or bills overseas has anything to do with the savings rate of
the
US public. I also don't think that the accumulation of US dollars or
govt securities by foreign countries indicates the decline of US
capitalism, a threat to the US ruling class, or the decay of US
manufacturing capability.
I do think US borrowing, US govt borrowing has everything to do with
tax revenues and expenditures, like ah... let's see US was running a
budget surplus prior to 2001, was considering pulling, actually may
have
in fact pulled, the 30 yr bond from the markets by advanced
redemptions,
The federal deficit isn't all that big. What changed in recent years
was a huge increase in mortgage borrowing. The stock of mortgage debt
was equal to 65% of disposable personal income in 2000 and is 100%
now. Total household debt rose from about 67% of GDP to 95%. Over the
same period, federal debt rose from about 34% of GDP to 37%. The low
savings rate reflects a rising rate of borrowing in the aggregate,
but it also seems that the upper quintile stopped saving in the late
90s and hasn't gotten back into the habit yet. So our rich can't lend
to our middle- and low-income households; instead, we have to go
abroad for cash.
Doug
