Jolly_Rancher

Personal Income and Spending: Saving is the New Trend (Again)

"Substantially higher savings will help rebuild a better economy in the future and it will save the dollar. "

Mike McGinley, cutting back on personal spending and increasing savings will help the dollar only in so far as most of what consumers buy is from over seas. However, that type of dollar rally doesn't really help the U.S. because it makes exports more expensive to foreigners. So we export less. What the U.S. really needs is for input costs to fall as compared to input costs in other countries. For instance, labor rates need to fall here relative to the same labor in other countries. Costs related to government regulation and waste disposal need to fall. Additionally, the quality of labor needs to rise. A more educated and willing labor force will mean more productivity. More productivity means the same money buys more labor, and gets more output. Once this happens, investors will send production to the U.S. causing the dollar to rise. Note that Japan has a very high savings rate but its economy is in the doldrums for decades. True, the yen is high, but that hasn't helped them either.

Jolly Rancher