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To: bambs who wrote (54987)	9/6/2001 2:57:49 PM
From: RetiredNow	Read Replies (3) \| Respond to of 77399

Hi bambs, I understand how you would make the mistake of thinking savings are a good thing. However, economics 101 will tell you that spending, not saving, is a good thing. The virtuous cycle is begun with lots of consumer, business, and government spending. The virtuous cycle is continued with low taxes, frictionless markets, low unemployment, and productivity growth. Right now, if consumers were to reign in spending and start saving like mad, then that would have a ripple affect that would have dire consequences for our economy. For all of you that are interested, Aggregate Demand is defined as consumer spending + business spending + government spending - taxes. That's a simplified version that doesn't take into account such things as the multiplier effect of spending, etc, but it's good enough for the layman. Any of those spending figures go down and the economy suffers by that amount adjusted by a multiplier affect. If taxes go up, the economy suffers in two ways: lower aggregate demand and lower consumer spending (hopefully offset by government spending). Anyway, you can play with the formula, but it's more useful in understanding that spending is what makes the US economy strong. Saving is what has made Japan's economy weak. They weren't able to spend their way out of a depression, not to mention all their other structural problems.

To: bambs who wrote (54987)	9/6/2001 7:59:28 PM
From: Victor Lazlo	Respond to of 77399

bambs, like many people in the US, you are ignorant of, or at best do not appreciate, the huge cultural differences that differentiate Japan and America. <<we have no savings, the japanese were and are huge savers (they account for 40% of the worlds savings) The average american is 8k in debt to credit cards.>> The Japanese saved themselves into a prolonged bear market and economic downfall. What Japanese co can make any money, unless they get 80% of their sales from export? And obviously, Japan is not the low cost exporter any more. Far from it. So the econ in Japan is languishing in large part because they save too much. <<We have huge mortgages on over valued homes...just like japan did. % of equity in homes has gone nothing but down over the last 20 years while prices have gone sky high. when the real estate bubble breaks the equity people think they have in there homes will be gone.>> Yup, the Japanese suffer from the extreme opposite cultural problem we have. <<Japan had a huge trade surplus, we have a huge insane trade deficit. >> Their exports were commoditized right before their eyes. Our US bonds never were. Still no competitor to US Govt bonds, which the Japanese and the Chinese love so much. Nothing will change there. Victor