Americans Don't Save, They Invest

Americans continue to invest heavily in America and the global economy. Simultaneously, the press is hot to report that the savings rate is at a multi-decade low. I have pointed out before the pure absurdity of claiming that the wealthiest nation that ever existed does not save adequately. It is a logical disconnect of massive proportions. Nonetheless the theme persists throughout the MSM (check out that incredibly stupid headline in the link) and in the minds of idealogical-driven curmudgeons like Morgan Stanley's Stephen Roach, who have the cover of a respectable job as an impartial analyst. So let's say it again all together now, "savings rate statistics do not account for investment gains!" We are not a nation that puts cash under the mattress and that is what the savings rate essentially measures, how much cash is under the mattress. We are ravenous investors in stocks, bonds and real estate. In addition we are aggressive investors in ourselves, pouring hundreds of millions of dollars into higher and technical education, all of which is treated as 'spending' in the savings statistics even though it is clear to us that there is a high financial return on education in our modern economy.

Bottom line, in terms of meaningfulness, the savings rate is pure garbage. Ponder how today's savings rate, which accompanies an all-time high in for the stock market, can be similar to that of the Depression Era. Immediately that should tell any halfway intelligent person that something else must be going on and to look elsewhere for relevant factors.