Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: LLCF who wrote (106848)	6/6/2001 6:57:39 PM
From: Mark Adams	Read Replies (3) of 436258

DAK, I think you made the most excellent insight regarding the overall savings rate being skewed by higher income individuals. I didn't comment on it at the time, but it set off a light bulb for me. Another case of my using a brush to broad to see an accurate picture. I found this today, which I thought you might find of interest; it seems to belie the hypothesis of that earlier post. FED STUDY SHOWS NEGATIVE SAVINGS RATE MISLEADING. LOWER BRACKETS SAVINGS INCREASING. UPPER BRACKET SELLS LOTS OF STOCK EACH YEAR. The Federal Reserve published a study in April (A Cohort Analysis of Household Saving in the 1990's by Maki and Palumbo) showing that all but the highest income bracket actually increased real savings rates over the past few years. However, the top bracket of income types had a negative savings rate. Why? They sold lots of stock. They didn't necessarily consume anything. Rather they sold huge amounts of stock, in many cases using the funds for business purposes. In other words, when insiders sell large numbers of original shares, that sale shows up as consumption, regardless of what the money was used for. trimtabs.com

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