That's very true except, in my opinion, for cars. Many Americans that I know will only buy Japanese because of the high quality.
We have a 60,000 page tax system designed to tax (which is the same as discourage) work, and reward both debt and outsourcing. It worked. If we are to avoid a total collapse, we need to produce and sell to the world at least as much as we consume.
I disagree, people do what's in their best interest, and spending is the path of least resistance and has been for years. This country was built upon immigrants that saved only to give their wealth up to the next generations that have seen the advantages of deficit spending (debt). Hmmmm, sounds a little like our government. We have a government that says we should be saving while they do the spending (the government knows how the spend better,don't you know that? heavy sarcasm there). There's a lot of factors at play including globalization, the conundrum of thrift (which the Bernanke is alluding to) and currency issues; but at the end of the day, current economic policies tell us to keep spending and it will be okay. If Bernanke is serious about what he's saying, then I think he just tipped his hand that .25bps is going to be it and maybe it for a while. Who cares if the titty babies have piled into treasuries, good companies will still produce profits and bad ones will go under. There will be too much value in the markets eventually to stay in treasuries for too long, and those with good credit will still be able to borrow. The current market situation must work itself out "naturally", to the extent that it can. Savers would then be allowed to have their day with a Fed out of the spotlight to some degree. Look the spenders have been bingeing and leveraging, after I binge I have to let my body recover through a little less activity and rest. Since we seem to think this Fed's going to choose the "Hair of the Dog" form of recovery, we'll just have to wait and see how big of a shot it's going to pour for itself.
stop taxing interest on savings as ordinary income and there will be a flood of savings..... will that happen....hell no
I agree that we need to change our laws/policies and saving should be encouraged in every reasonable way possible. But here's my question: I know, for example, that some of the Asian cultures save to a fault. But is that because of their tax set up and monetary policy or just because it's a cultural value?
Japan is about the most Nationalistic... they dont allow immigration and you cant apply for citizenship They as a rule, are savers and will accept 0.5% yield and pass up US Treasuries maybe WWII hold overs have an effect..... but I have to hand it to them, they will own the West before this is all over.... and we'll all be renters
In China they save 50%. Here in the U.S., anyone that makes any money pays 50% in taxes, if you add all the taxes together, so it would be virtually impossible to save 50%. The problem is we tax savings, investment, and work instead of debt and consumption. The results should be no surprise given what we are encouraging vs what we discourage. The system needs to change radically if we expect the result to change radically.
Well, this is not really about owing the west of anything. People save because they feel insecure. If you are thinking that you can only count on yourself when : you are old, natural disaster hit, disease, war or conflict on home front...etc... You will save. If you see your grandparents getting screwed by the government, you will count on yourself more. I think in U.S. People trust the government more, but the edge can cut both ways. Now, you have a government's spending habit which reflect the average American. A.K.A., give it to me now and let our children deal with the problem. Or..... Average American just don't have good financial sense.
Are you telling me that in China there are virtually no taxes?!? I don't mean to sounds skeptical, but socialist/communist and low taxes just don't seem to go together... Tell me more.