Monday, February 05, 2007

Low savings rate for 2nd year......should we worry.....should we save?

I read an article in my local paper (here it is in another) that reports that in 2006, the personal savings rate was again negative. It was over twice as negative as it was in 2005......-1% vs -0.4%.

This is also only the second time there have been two years in a row of negative savings....can you believe it! Only the second.....but the worrysome thing is that the first time was back in 1932/1933....that's right, back in the great depression when there was a 25% unemployment rate.

What does all this mean? Should those of us who save worry? Should we stop savings for fear that money will ultimately become worthless, or should we instead make sure we have at least some of our investments in a place where they are at least inflation protected?

I like the latter case because I think that there will eventually be a time when the American Dollar might fall off it's high horse and we will have to have some sort of hedge against that.

Where should we hedge? You've got me....right now a dollar crash would affect it would seem there would be very few places to hide....but as the dollar continues to soften, there will be places that become naturally strong.

Some thing the Euro will be it....who knows. Perhaps some other small currency we don't have our eyes on.

I'm going to continue to try and save....but not in my mattress, that's all!

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Americans are spenders not savers.

3:37 PM EDT  

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