National Savings

Mike Mandel has a chart:

Felix Salmon comments:

The personal savings rate might be going up, but that’s just thanks to the hundreds of billions of dollars which the government is borrowing and transferring to the private sector to save. (Not the most efficient use of borrowed funds, it must be said.) Overall, the net national savings rate is at its lowest level since the Depression, and it’s falling: it’s now an astonishing -2.5% of national income.

That seems like a plausibly efficient use of borrowed funds to me. If the federal government can borrow money at low interest rates and give it to people to use to pay off high interest credit card bills, then it’s creating a lot of long-term value for the average citizen even though he’ll eventually need to pay off those government debts with higher taxes. In effect, by pooling the indebtedness and shifting it off credit cards and onto treasuries, we’re getting a much better deal.


That said, I’m consistently amazed by the lack of attention given the causes of the long-term structural decline in the savings rate.