THE EASE WITH WHICH SUCH SAVINGS RATES HAVE BEEN ACHIEVED...:

Stop Saving Now!: As consumers hibernate and investors hoard cash, the economy is withering. This new age of thrift is understandable. But for a recovery to take hold, Americans will need to start taking risks again (Daniel Gross, 3/14/09, NEWSWEEK)

Call it a flight to safety, a rush from risk, the new sobriety. "People have run with their money to banks that they think are still healthy," said Ronald Hermance, CEO of Hudson City Bancorp, where deposits have soared by nearly one third since the beginning of 2008. In January, Americans saved 5 percent of disposable personal income, up from 0.4 percent in the fourth quarter of 2007—and our newfound desire to squirrel away cash seems likely to continue. When pollster Scott Rasmussen asked investors what they'd do with new money in February, 32 percent said they'd save it, and only 16 percent said they'd invest in stocks. Even though they offer virtually no returns, money-market mutual funds, now guaranteed by the federal government, have attracted $3.8 trillion, up from $3.4 trillion a year ago. The global rush for U.S. government bonds, the world's safest and most liquid investments, has pushed rates so far down—the 10-year bond yields just 2.9 percent— that investor (and Washington Post Company board member) Warren Buffett has warned of a "U.S. Treasury bond bubble."

...just demonstrates how little debt we were carrying.

Posted by Orrin Judd at March 14, 2009 7:32 PM