Does It Pay to Save?

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Roben Farzad at Business Week wrote a pointed analysis of how American savers have gotten hosed by the current economic state. Farzad makes the point that those who resisted excessive debt and lifestyles beyond their means (BTM) are now faced with low savings yields, high inflation, and overall instability. But those BTMs are seemingly rewarded with bailouts and bankruptcy.

Is America just one big BTM? We want bigger houses, fancier cars, and nicer clothes. On a national level, we’re using resources we don’t possess. But who will bail us out? What will become of the savers who tried so hard to be responsible in the face of rampant consumerism?

Farzad ponders:

Maybe savers’ ultimate vindication will arrive when and if every asset is so deflated, credit is so choked off, and misery is so prevalent that only those with cold hard cash can lob in lowball offers for homes, cars, and everything else. Assuming, of course, they didn’t stash all their money in one of the many banks that is about to go under…

Just as interesting as the article is the first comment by a reader in Japan. The commenter claims that country is essentially a cash society where consumers make even major purchases like furniture or cars without the crutch of credit. Homes are financed with big down payments and 15 year notes.

According to the Japan Economy News, the amount of saving deposits over loan balances in Japan is at a record high. In addition government bond issuance is down. Not only are Japanese citizens eschewing credit, it seems their government is attempting to live within its means as well.

What a concept.