UNCOMMON CENTS 37

"IF WE WANT TO KNOW HOW MUCH PEOPLE ARE SAVING, WE NEED TO LOOK AT HOW MUCH WEALTH THEY HAVE. PEOPLE INVEST ...IN MANY AND VARIED WAYS BEYOND THEIR TRADITIONAL SAVINGS ACCOUNTS. AMERICANS SAVE AS MUCH AS THEY ALWAYS HAVE; OTHERWISE, THEIR WEALTH RELATIVE TO INCOME WOULD FALL. WE'RE SAVING THE RIGHT AMOUNT." SAYS EDWARD C. PRESCOTT, 2004 CO-WINNER OF THE NOBEL PRICE IN ECONOMICS, I COULDN'T DISAGREE MORE.

SPENDING RISES WITH INCOME; OVER TIME AMERICANS HAVE BECOME WEALTHIER BUT THEY HAVE CORRESPONDINGLY SPENT MORE. WHAT THEY HAVE TO SHOW FOR THEIR ACCIDENTAL TOURISM THROUGH THE LAND OF MONEY IS NO NEST EGG OR INVESTMENT ACCOUNT. RATHER THEY ONLY HAVE THEIR HOMES. BY KEEPING CURRENT WITH THEIR HOME MORTGAGE PAYMENTS, AMERICANS' MAINTAIN THEIR SOURCE OF EQUITY. SURE, THE VALUE OF MOST RESIDENCES HAS STEADILY RISEN OVER THE YEARS. BUT OTHER THAN BUILDING WEALTH THROUGH PROPERTY, HERE INCLUDING LAND, MOST OF WHICH WILL NEVER BE PAID OFF BEFORE DEATH, WHERE ARE THE SAVINGS? FURTHERMORE, WHEN WILL THE ‘INVESTMENT’ BE SOLD OFF AND/OR PAID OFF TO REAP A PROFIT? MR. PRESCOTT'S CLAIM THAT AMERICANS SAVE IN "MANY AND VARIED" WAYS CANNOT BE SUBSTANTIATED WITH EXAMPLES OF OTHER INVESTMENTS. IN FACT, AMERICANS EXPENDITURES EXCEED THEIR INCOMES.

I FURTHER QUESTION HOW SPENDING AND SPENDING ON MATERIAL POSSESSIONS SUCH AS THE 'BIG HOUSE' ULTIMATELY DEFINES WHAT'S ETHICAL EVEN THOUGH IT IS LEGAL. THE ENGINE PROPELLING OUR ECONOMY ALWAYS HAS AND SHOULD BE, IF MR. PRESCOTT’S OPINION PREVAILS, SPENDING. AGAIN I DISAGREE. SPENDING IS SAVING? OTHER THAN EQUITY IN A HOME, WHICH CAN ONLY CONVERT INTO CASH THROUGH ITS SALE, WHERE HAVE AMERICANS INVESTED IN THEIR FUTURES BY WITHHOLDING MONEY FROM THEIR INCOMES? SOCIAL SECURITY AND POSSIBLY A COMPANY PENSION ARE FORCED SAVINGS. ONLY MONEY PUT ASIDE THROUGH THE HABIT OF RESTRAINT - AGAINST SPENDING EVERYTHING ONE EARNS - FULFILLS THE DEFINITION OF SAVING, IMPLYING SELF-SUFFICIENCY AND PERSONAL RESPONSIBILITY.

HINT: NO ORGANIZED RELIGION OR UNORGANIZED PERSONAL FAITH BELIEVES IN SPENDING ONE'S WAY INTO HEAVEN. K.I.S.S.