Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (14787)	11/3/2004 11:02:46 PM
From: CalculatedRisk	Read Replies (16) of 116555

This piece from NT's Kasriel doesn't make sense to me. I think he is correct that Baby Boomers will feel a growing need to save, but I think he is wrong that the government will provide "baby boomers what they want in the form of tax-advantaged saving options." I doubt this proposal will make any headway since there is no way to pay for it. The author confuses me when he writes: "An increase in household saving does not necessarily mean a slow down in real GDP growth." Then he contradicts himself: "But the increase in the saving rate, by definition, does imply a slowdown in the growth of discretionary consumer spending." What does he think is keeping the economy growing? It is primarily consumer spending (some of it funded by borrowing). I think a higher saving rate will lead to lower GDP growth in the short term. He is correct in the longer term - more savings would be healthy. Changes to the AMT is another issue that needs to be discussed with regards to savings / consumer spending. This will either lead to less consumer spending or larger deficits. I wish this had been discussed during the campaign.

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