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Why Americans Don't Save: "Credit has become America's welfare policy."

Unlike people from other countries, Americans aren't big savers - that much we know. But why exactly?

Sheldon Garon, professor of history and East Asian studies at Princeton University explains in his new book, Beyond Our Means: Why America Spends While the World Saves. In short, "credit has become America's welfare policy."

... in the 1980s, Americans stopped being good savers - at first slowly and then very rapidly in the 1990s, particularly as housing and consumer credit became available to Americans in amounts unlike anything seen in the rest of the First World.

First, the credit card industry was deregulated as the result of a 1978 Supreme Court decision. Now able to impose any interest rate they pleased on unpaid balances, credit card firms aggressively expanded their customer base beyond the affluent to target middle and lower income households. By the 1990s, most Americans held not one but several credit cards, and more than half of those cardholders carried unpaid balances.
Second, home equity loans—which had heretofore scarcely existed—exploded. This occurred after the 1986 tax reform made home equity loans one of the few types of credit in which interest remained tax-deductible.

From the 1990s to 2005, homeowners borrowed more and more against their equity as home prices skyrocketed. Americans essentially stopped saving. Why save when you could borrow so easily?

Link - via Metafilter


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You know, the only conspiracy I believe in is the conspiracy of Self. But there are certain events that take place in the world in the name of Self which may appear to be a conspiracy of sorts. Jekyll Island, the Balfour Declaration, the Federal Reserve Act and the Debt-based monetary system all seem to indicate a vicious control of the monetary system.

I have independently verified these facts by sourcing out the original documents (and not relying on pop internet documentaries like "Debt As Money" or "The American Dream" or "The Corporation").

This activity is really just a subsidiary action of the worship of Self.
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How about this: people are often forced to use credit in emergencies because the rate of inflation on cost of living in America has not matched wage inflation in the past 40 years. Sure, many people are irresponsible with credit cards -- but, earmarking savings is also simply impossible for a significant portion of lower and middle class Americans who have very realistic outlooks on standard of living and try to spend within their means.
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fuck credit. i use the all American dollar. credit is a perfect way to pay double for what you can buy with cash for original price. America needs to start using cash more than credit. god help America
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If it weren't for credit, how many people in America would be able to afford a house by buying outright in cash? Only the very wealthy -- or those who earn far more than they need to survive.

Those who are in lower-paying jobs (took the first offer that'd get them off unemployment, rather than stay on the government teat) end up with a ratio of income to bills that keeps them in survival mode. If an emergency comes up, credit is the only way to survive.

That said, using credit can be the best way to to -- but only for emergencies.
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