tag:blogger.com,1999:blog-1245918824201406899.post3828091187540840907..comments2012-08-21T14:25:43.048-07:00Comments on Robert's Comments: Over Savings ?Roberthttp://www.blogger.com/profile/14455788499385673507noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1245918824201406899.post-51829652892153231792012-03-19T18:19:48.893-07:002012-03-19T18:19:48.893-07:00That's my hypothesis as well.
You have faith ...That's my hypothesis as well.<br /><br />You have faith in the "US consumer," but as you note we can no longer be so broad -- middle class consumers have been providing that unbounded gluttony, and now they can't, and further demand growth has to come from a completely different set of consumers.<br /><br />So in your view, what has changed from the perspective of the 1% that makes them want to spend way way more than they have in the past? What about lower growth makes them want to buy all sorts of things they could have had anyway? Who spends more when their incomes drop? And will they not only spend their interest payments but do so within months of receiving it like the consumers they're replacing? Remember, it's the flow of money that matters, not the stock.<br /><br />The differences between the consumers who've been driving increased demand and the consumers you're predicting will take over that role are enormous. It just seems absurd to me to expect they'll not only pick up spending but replace the missing spending 1:1. Besides, they'll demand different things, and our productive capacity for what they would demand if their demand shoots way up is not going to be as good as our productive capacity for what the middle class has been demanding.<br /><br />Unless we replace the credit the middle class was getting with higher incomes, at the expense of the profits and interest that Wall Street was using to create that credit, we're in a very different economy demand-wise going forward.Eric Lhttps://www.blogger.com/profile/17688525347746547529noreply@blogger.com