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AW: The Great Foreign Financing Misconception



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Playing this game now, maybe we should figure out what the net worth of the US 
is, I suppose that is the real valuation of wealth. I know what mine is today, 
what it was ten years ago. So I know if I got richer or poorer, independantly 
of savings or debt levels. My debt could be 100 times larger, and I could still 
have a higher net worth.

What is the net worth of the US population, and what's the trend?

Gwenn

| -----Ursprungliche Nachricht-----
| Von:	Alexander Levitin [SMTP:alevitin@xxxxxxxx]
| Gesendet am:	Wednesday, October 06, 1999 6:38 AM
| An:	BruceB; swp; hpm; Real-Traders
| Betreff:	Re: The Great Foreign Financing Misconception
|
| 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
| >