As an anthropologist, you acknowledge culture is a fluid concept in relation to geography or nation state. The US of the 1950s was a different culture and country than the US of 2008. This isn't necessarily bad, it is just a fact, you can never step in the same stream twice. So lets take a look at the US back in 1959 when there were a mere 148 million of us running about vs the 307 million today. We were a younger country median age 29.4 vs 36.8. Men got married at age 22.5 and women at 20.2 in 1959 on average vs. 27.5 and 25.5 today. check out 1959 vs today snapshot here.
This younger US was also saving a lot more. Here is a graph and data of this change over the years. For all of the griping and fighting over taxes they have been fairly banded. This is BEA data so your mileage may vary.
Here is the data:
and source link to the BEA.gov. I had to do a little work with a population adjuster.
My point with all of this is that behavior and cultures change over time. The long term investor should watch these ebbs and flows in culture. If we saved as much as the adults in the 1960's the average person would be saving roughly $3,900 per family member. That is the average, the median figure is lower. It is important to note that this data uses averages and that medians probably tell a lot more about group experience as high end incomes are more responsive to tax and investment policy.
A high savings rate in the midst of a recession could give us the Japanese problem of the 90's with a lack of domestic consumer consumption to get us out of the mess we got into.
Better fire up the export engine and fuel it with cheap dollars. Inflate our way out of this.
P.S. Please don't let the sovereign wealth funds in on this. We need them to keep buying our paper based assets.
This article has 3 comments:
Look what is about to happen in Japan: the pension age is about to be raised to 75 years because many of the IOUs they hold simply can't buy them retirement at 65 anymore. What will happen to the issuers of the IOUs?
Isn't interesting, that even though the country has always had credit creation as a means to increase the overall economy, look at the first chart shown.
When did credit (not mortgages) really start to become available to mainstream americans and when did the use of credit in financial markets really start to take off ??
In the early 1980's, just as the chart shows, where American's savings rates peaked and began their long slide to zero.
<< The problem is the general stupidification and laziness that come with increased availability to live beyond one's means. Why work and then buy a tv when you can do it the other way around and write some IOUs in exchange to willing 'trade partners'?>>
The above poster's statement is correct. We are a nation of "flash over substance" where people have convinced themselves that if they "look" wealthy, then they must be wealthy.
The dumbing down of america and this "hip-hop nation lifestyle" has helped to enrich a select few, while using everyone else to help them attain that wealth. I have never seen so many white trash morons who put more effort into deciding what tattoo, or piercing to receive, than actually making adult life changing decisions.
But thats why the top 10% of the country controls 90% of its net worth, and by the time these dummies figure it out, it will be to late.
....IN the meantime The older generation will sponge off more Social Security than they every paid in.