2006-07-01 13:20:39 · 9 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
The American savings rate is the lowest since the Great Depression for several reasons, none of which are very good.
First, real wages have been declining for years. The government has redesigned the way they read inflation to make it seem better than it really is. The current rate of inflation is actually about 4.5-5%. Wages have not kept up and in order to live our rock-n-roll lifestyles, we have had to borrow...from our houses, from our moms and dads, from banks...
And actually, it is not a rock-n-roll lifestyle, even though that is what everyone in the rest of the developed world wants to believe.
I know a few people who have plasma TVs but I know many more people who have trouble paying the dentist, the gas and electric bills, much less buying a new Lexus ES350.
What happened was complicated but suffice it to say that when Alan Greenspan was the Chairman of the Federal Reserve Board, he kept the printing presses rolling full tilt. Now, I don't know what you know about economics but it is bad to make too much cheap money because everything gets more expensive over time and there comes a day when we have to pay for it.
Even current Chairman Benjamin Bernanke said the policy of printing money was one that we might as well hover over the major cities and "throw money from helicopters"...it would be the same thing. You will hear him referred to as Helicopter Ben from time to time.
Unfortunately, this is just one problem he is going to have to deal with. The bills are coming due on all this cheap money that we have had for so long...and THE MAN ain't gonna wait while we call our mommies for another loan.
2006-07-01 13:32:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Because in 1933 the average family didn' t HAVE to HAVE two new cars in the driveway. We have so many more THINGS than people had then.
Many things that were considered luxury items then are seemingly necessities now. Air conditioning? TV's in almost every room of a house? Eating out? Buying new vehicles? Computers? Internet? Cell Phones?
In order for us to live one one income, we had to do some serious sorting in the wants vs. needs catagory.
2006-07-01 14:07:47 · answer #2 · answered by Mustang Gal 4 · 0⤊ 0⤋
People lived much simpler in the past and spend way too much today. People need to slow down, which will allow them to save more money and be happier with their lives. Yes, prices have gone up, but so has the inability of people to properly budget and save.
2006-07-01 14:38:37 · answer #3 · answered by Rich B 3 · 0⤊ 0⤋
Simple. Buy today pay tomorrow mentality that we all bought into (pun intended). Oh, wait. The TV says Macy's is having a 4th of July sale. Gotta go. Darn, where did I put my credit card?
2006-07-01 13:52:45 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Because you cannot be arrested and convicted for a debt.
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2006-07-01 15:25:50 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Things got more expensive & people these days buy things that they are not in need of it.
2006-07-01 13:30:08 · answer #6 · answered by Anonymous · 0⤊ 0⤋
credit sources are abundant
people can't be happy living with what they can afford "at the moment"
No deferal of gratification.
2006-07-01 15:29:21 · answer #7 · answered by Nick C 3 · 0⤊ 0⤋
instant gratification
keeping up with the Joneses
easy credit
Take your pick
2006-07-01 15:40:29 · answer #8 · answered by homeschoolmom 5 · 0⤊ 0⤋
Sorry, I am too busy spending to answer that question...
2006-07-01 13:23:48 · answer #9 · answered by Anonymous · 0⤊ 0⤋