Friday, June 26, 2009

Personal Savings Rise

Americans are saving their loot at a rate not seen in several years. Their attitudes towards debt fueled consumption are waning. This is a good thing that leads to a sustainable economy.

In the mean time, the federal empire is growing based on debt-fueled consumption and looting from the tax payers. Keynesian economics is another one of the politicians wet dreams because it says during an economic crisis, stoke fear in the public in order to make a power grab. Bankers also love Keynesian economics because while private demand for credit falls, public demand rises. So their world of defaulting private credit is offset by public demand.

With public debt rising quickly, social program obligations totalling trillions of dollars quickly approaching, and a healthcare and cap and trade debacle about to be passed, the treasury markets should be shaking. Not many individuals want to get into debt and are doing the rational thing by saving money and paying down or defaulting debt. Unfortunately, we have complete morons listening to what the central bankers are saying about Keynesian economics and getting the country further into debt.

The net effect is a wash. Individuals will have to pay higher taxes to service the ever increasing debt load. This crowds out savings and investment that would normally go towards productivity instead of social transfer payments and government pet projects. The economy will not grow in real terms as government becomes a larger % of GDP because the government makes pet project investments that typically are malinvestments. So the reality is, we're becoming serfs for a class of politicians and bankers, while losing our grip on liberty.

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