What are the long-term consequences of American consumers' unwillingness to save?

Question

Everybody has heard by now that Americans' financial self-discipline is worse than it's ever been. What are the long-term economic consequences of all the debt we're accumulating?

Answer 1

we will become increasingly dependant on foreign funds which will drive up interest rates and at some point cause our economy serious trouble....

Answer 2

It is a norm for high consumerism in the Americans' culture though the average worker earns a merge wage. Hence,notwithstandingly, the consequences of the inability to save for old age has dire consequences.
It would lead the Amercians to fall into the state for social security and welfarism.
This is seen in the many Food Banks in Los Angeles and many cities in USA for the poor kids and their familities.
Where virtues such as thrift in the form of saving is denied,
the state and the rich will have a heavy burden to instil social responsibility on the individual Americans.
As the culture of living on high credits and loans, the average Americans will deplete its savings and funds.
Hence, this will result in social problems and high crime rate. Moreover, living beyond its means does indicate social
indiscipline and decadence.

Jerome Ho
www.bni.excellence.com
www.myvideotalkasia.com/jerome
www.SkyQuestComMedia.com

Answer 3

The current lack of saving is made up by foreign investment so our capital investment (future productivity) is not suffering. But the returns on the investments will go to foreigners so the total income of Americans will be less in the future. The government now taxes corporations so part of the foreign income can be taxed. There will be real problems if the foreign investment stops and the rate of capital investment falls, and with it productivity. There are also consequences for individual households with no saving. It should be noted that money spent on education is not counted as investment, and money households have gained because of increase in housing prices is not considered as savings.

Answer 4

The debt that is accumulating will eventually bring the US to its knees and take its teeth away on the international stage. Consider for a moment how much American debt is held by China alone. Lets say China starts abusing human rights really badly (I know, it's hard to believe).

Now pretend America stands up to China and says 'bad China!' and China says back 'shut up or we'll sell our holdings of US debt securities on the open market and bring down your economy in a matter of hours!' There won't be a whole lot the US can say to that. China alone holds over $300b in US debt (and climbing). That's a lot of leverage that can be used against the States.

Japan holds nearly twice that amount. All together foreign countries hold roughly 1/3 of the $6T US debt. It is a really interesting economic problem and it looks to me like good fiscal policy is the only way to get it under control.

The best way to understand the long-term consequences are to bring them to a level you can understand. Imagine for a moment that you are America. Now imagine you borrowed some money from a friend. Now imagine you borrowed all the money you could from your friends so now you have to borrow from your enemies... This road leads to only bad places right?

So what's the solution? To quote Chris Rock: 'Don't buy sh*t you can't afford!'

Answer 5

The American nation will become less wealthy when they would have to retire the debts, especially the debts to the foreigners. Thre transition to go back to normalcy will mean fall in real per vapita incomes, employment at lower wages, higher unemployment at current minimum wages, losing of scientific and managerial talents to international businesses, reduced ability to ward off terrorists, reduced ability to encourage and fund scientific and technological research, increasing social tensions, deteriorating health and educational standards, etc. But sooner or later, the middle class and the politicians would find ways to break the vicious circle of declining strength.

Answer 6

everybody is going to broke, and only the Government and to
p leaders of other countries are going to have money, and all of us are going into slavery. to be sold to the highest bidder.o
ur women and girls will be put on the market, to have sex with
their masters, and to have their children? the white and rich p
eople wont rule like many think that they would, because they
too will be slaves, just like us, they will not get no more respec
t, than we would get? and for onetime in history, we all will be
counted as equal? people maynot think or believe that those
days are on the way, but i encourage you to continue to live th
e same old mean, evil, unloving, uncaring, unforgiving, unright
eous, and unfearing of GOD ways? we are going backward in
time and history, just as sure as im sitting here telling you all o
f this information? just look around you, and see whats going on? do you truly think that man has the control of everything that is happening? no,no,no,no, and a thousand more nos. its
time to start paying close attention to whats going on in this w
orld., and to stop taking everything for a joke, because the onl
y ones who is at the butt end of that joke, is us?
will be slaves to a 2nd, 3rd, or 4th, nation of power?

Answer 7

Those who do not save will "vote" to redistribute the wealth of those that do in a democracy. (already happening but it will get worse).

Eventually fewer and fewer people will be motivated to "save" if it will be taxed away and redistributed, and then the government spending and social programs will colapse due to lack of money.

Answer 8

higher number of people living below the poverty level which will in turn put a big strain on the government and consequently the economy.

Answer 9

Well internationally, and in the international world, the us of a, becomes weaker.

Answer 10

Just when most of us are getting out of our parents homes we will be moving in with our grown children. Ironic, isn't it?