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If 100 million households all save their discretionary income at the same time, and/or don't borrow, then our overall economy has to suffer.
If consumption dropped to zero, yes, but that would never happen. It is well-established in the literature that increased savings leads to increased investment. When you put money into a 401K or a mutual fund, it's not just sitting there waiting for you to withdraw it. The money goes to work in the greater global economy.
There's also the obvious downside of being one month away from defaulting on a mortgage or car loan. The savings rate was actually much higher even in the Spring when the economy was still creating jobs. It's since plummeted by 50%.
In 2018 GDP growth will top 4%, the stock market will continue to all time highs, the housing market will continue to do well. I dont see the democrats having anything to capitalize on.
In 2018 GDP growth will top 4%, the stock market will continue to all time highs, the housing market will continue to do well. I dont see the democrats having anything to capitalize on.
I could see that. I could also see GDP growth being negative by 2019, the stock market being in decline, and housing prices collapsing. The Fed will have virtually no monetary tools at its disposal to stimulate growth since those were all exhausted during the last recession. Baby Boomers who were looking forward to inflated bubbles funding their retirement will be sorely disappointed.
I quoted an article. 401k balances are included in national savings. Americans are generally crappy savers. Most Boomers are not prepared for retirement. This will be one of the largest crises the country will face since we're going to have a lot of seniors on the dole, resulting in increased government spending, and an electorate unwilling to endure tax increases. We will have fewer resources to address all the other problems we face (infrastructure, climate change, etc.).
This.
Cutting corporate taxes for global competitivity is prudent, but you need to balance it with tax increases on the wealthy. We have a major entitlement crisis looming as boomers, as a group, underfunded their own retirement while wanting lower and lower taxes.
The Bush administration asked Congress many times to do something about Freddie/Fanny/Hoa and nothing was done.
Fannie and Freddie don't originate mortgage loans. They're simply in the business of buying loans from banks. Fannie and Freddie actually had rather strict requirements about what type of loans could be included in their portfolios.
You can't write Bush out of the history of the financial crisis no matter how hard you try to shift blame over to Congress, Fannie, Clinton, etc. He actively promoted and incentivized zero down loans, which most reasonable people should have known would be a disaster, but everyone was cheering that on the same way they are cheering on today's stock market gains.
Cutting corporate taxes for global competitivity is prudent, but you need to balance it with tax increases on the wealthy.
I'm actually not opposed to the slashing of corporate rates. The "high" rates were all a fiction anyway since most corporations aren't paying the nominal rates.
The reality is that the middle class needs to pay higher taxes along with the wealthy. We rely too much on taxing the wealthy; I was reading somewhere that a 3-4% tax increase on the wealthiest Americans would only generate $300-$400 billion in revenue per year. That's obviously nothing to sniff at, but it's clearly not enough to resolve our fiscal woes.
Quote:
Originally Posted by okcthunder1945
We have a major entitlement crisis looming as boomers, as a group, underfunded their own retirement while wanting lower and lower taxes.
Well, as they start shrinking in numbers, Xers and Millennials will hopefully have enough power to start taxing and reducing their benefits.
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