Saving is Bad?

What a change in overall perception.
A penny saved is a penny earned.
Save for a rainy day.
Always have six months of salary saved.

Then comes a headline on Friday that the household savings rate in May was really good. In fact it was the best in 15 years. That means money is out there. It means that the recession is coming to and end?

Not so fast. All that news that people are taking care of their finances was part of the cause of a weak response on Wall Street. The economic recovery is not on the near-term horizon- because people were saving and not spending. With consumer spending the economy does not respond. Even though debt caused the crisis in the first place.

I have posted on this before and it remains, I believe, one of the weaknesses in our economy and perhaps even our economic system. It is a material-based- buy-buy-buy economy. I am not an economist and certainly don't understand a great deal of deeper economic theory. Yet I feel that somehow there is something inherently self-destructive in a system that depends on increased spending from year to year and not on saving. Somehow I think that there will always be big losers in such a system. Most of the time it will be the average consumers who find themselves having to be in debt to keep up.

Then comes a debt-crash like we have just had and people lose their homes, cars, health insurance and probably a healthy sense of self. I find that scary. I hope someone finds a way to build a system of production and economics that can live and grow without having to constantly be expanding and greater and greater rates.

Yes, maybe I am an idealist, but often we can set up an ideal and then move toward it. Let it be so.