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Creating a Culture of Saving |
| Section: CURRENT ISSUES / ECONOMIC WATCH |
| Author: Martin Hutchinson |
| Publication: The world & I online |
| Issue Date: 2/1/2005 |
| Size: 2,122 Words, 13,334 Characters |
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The U.S. savings rate was a dismal 0.2 percent of gross domestic product (GDP) in the third quarter of 2004, and nobody but economists seemed to care. Once foreign central banks stop financing the United States' twin trade and budget deficits, this will have to change, or crisis will ensue. Changing the ingrained U.S. spending habit won't be easy, and will certainly be unpopular.
Alan Greenspan, speaking not long ago in Frankfurt, Germany, remarked that "a diminished appetite for adding to dollar balances must occur at some point." This caused a further drop in the dollar, currently trading at a record low of below $1.30 = 1 euro. Meanwhile, the U.S. payments deficit in September remained over $50 billion, leading inexorably to an annual deficit above $600 billion, easily a record in no...
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...nlikely to accumulate more than one or two cards. The debit card alternative, in which purchases are debited directly to the consumer's bank account, would remain freely available and promotable, as today.
No administration is going to undertake such unpopular reforms without being forced to. Fairly soon, the market will provide the necessary compulsion.
© 2004 United Press International
(806 of 13,334 characters)
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