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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (14877)	11/4/2004 5:55:21 PM
From: RealMuLan	Respond to of 116555

Your point is well taken, but the reason the Fed can get away with what they are doing is, again, few Americans save, and the US economy is indeed based on credit. And even in Reagan's time, when the interest rate was pretty high, still not many people saved in the US (maybe around 4% of income?)

To: Jim McMannis who wrote (14877)	11/4/2004 6:44:41 PM
From: SeaViewer	Read Replies (2) \| Respond to of 116555

The same thing is happening in China. Saving rate decreased from 21% in January to 15% in August. Chinese saving rate is high, since there are hardly any social programs. People have to save for the retirement. In January official inflation rate was 3.2%, 1-year term saving was 1.98% Real interest rate was -1.2%. And now offical inflation rate is 5.2%, 1-year term saving is 2.25%. Real interest rate is -3%. The actural inflation rate probably is much higher. People are putting their money into inflated real estate market. I expect saving rate continuing going down. That could cause some trouble for the retail banks.