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I have heard that some Americans own the houses they live in or at least
have "an equity" in those houses. Is it some kind of savings? What are
savings? Is "the savings" the same as a "net worth"? Should we calculate
the increase in savings as an increase of the "net worth"? Are the savings
a "liquid" ("cash") part of the "net worth"? Do economists define the
language they speak?
Alex.
At 09:44 PM 10/5/99 -0400, BruceB wrote:
>> While it is true that the US savings rate is negative, it is at least
>> partially because money invested in the equity market is not counted in
>> savings. Most 401Ks are near 100% in stocks.
>
>Steve, you're letting the truth get in the way of a great gloom and doom
>thread this list has going! As you've suggested, the only reason the
>savings rate is negative is because of the way the figure is calculated. In
>its simplest form, the equation is Savings = Income - Spending - Taxes Paid.
>Now, not only does the government NOT include capital gains with income, but
>it DOES include capital gains taxes with Taxes Paid. This means the shift
>into stocks has a "double negative" on the savings rate.
>
>Another way to see just how warped this logic is is to assume for a second
>that CEOs, rather than rewarding stockholders through higher share prices
>(by buying back stock), paid out higher and higher dividends to them. Since
>dividend income IS included with other income in the equation, the US
>savings rate would have increased, even though nothing had really changed!
>
>Bruce
>
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