OT: How to spur savings in the US?

I watched a program the other night that really shined a light on part of the problem our contry is in now.
Did you know that even though the Chinnese make just a fraction of our income per capita. Some thing like $2000 a year or less. They save a high percentage of that money. In the range of 25%. Individually thats not much, but times that by billions of people investing. That is a substatial sum of money.

Where does that money go? It goes to buy US and other assets.To invest in US banks ect. That is where all the excess capital came from that got loaned out to unqualified home buyers and shady bussiness deals.

The root of our current problem?

Where does US money go? Mostly our money does not get saved. It gets used up consuming products from China and Japan.
In effect we are swapping US assets for China junk.

Now I am not going to say that I have not enjoyed being able to get a cheap CD player. If I did I would be lieing. I guess I also would like the oportunity to be able to buy a cheap CD player latter on too.
We have to find a way to ballance this thing out some. Its tilted way to far out of wack.

Personally my Wife and I have made changes to our life style to accomodate more savings.

If the idea is to wait until every individual has the bulb go off. It might come on too late.

I think whats needed is a tax break for normal savings. We already have 401K's and IRA's and the like. That is for retirement savings.

What if you could dump up to 25% of your take home pay into a savings account that you still could take out of if needed? Then at the end of the year. What ever you had in it would be taxed at a lower rate. The next year any increase from the year before would also be taxed at that rate.

That way your money could go in and out as needed. You would only have to deal with the tally man at the end of the year.

Just a idea.

Your question says it all, the real problem is this, your savings, which represent a percentage of your previously taxed take home pay should not under any circumstances be subject to additonal tax on gains in conventional passbook accounts or cd's. The Goverment should get out of peoples pocket once the payroll tax is paid.

What I don't like is how the Chinese can come here and buy up all the U.S assets they want, and we are not free to go buy chinese real estate. The chinese have been buying buildings in NYC and everything. I am afraid America will become foreign owned.

I also think our goverment is being foolish by not grabbing up oil reserves. What overseas country is it thats going to be drilling near Florida again? Doesn't really matter, but instead of laying claim to more fossil fuels for the future, our leaders have decided that some miraculous fuel is going to be developed, so therefore there is no need for oil. I think they should try to secure more oil, and then if a miracle fuel doesn't happen, this country won't be in such a tough spot. It would be easier to sell the oil then to not have it.

One thing perhaps you're missing. The big difference with China and some other countries is we the American worker are competing against the Chinese Goverment and other Goverments. When China buys up fertilizer and fuel (just 2 examples) it's the Chinese Goverment buying not the Chinese people. We can't continue with such trade deals and stay on or near the top. Just because you see pictures of cars. streets and tall buildings doesn't mean the entire country lives that way now. It's only a very small percentage that appear to live like we do.

Just take farming alone. If the United States Goverment supplied fertilizer and fuel for farming here we could save a heck of a lot of moeny as farmers. Look at Russia. Do you think the Russian people are buying all those combines and other farm equipment??? Better take a closer look. We've had many presidents that wouldn't tolerate such one sided trade deals that we're in today. The United States is being sucked dry because of such deals. I'm not trying to get political here but will lay out a fact on just trade. When Clinton started this trade he saw that for each job going out of the country we'd have to replace it. He kept the jobs going over seas evened out with what we lost over there and stuck by the number of jobs allowed to go per year. In the first 3 years Bush allowed China alone to excede the trade agreement of job letting by 632 time of what that agreement called for. All he had to do is slap his name on the line and keep that in check. He chose not to do that because our companies wanted to move out and move fast. That's why the trade deficite shot up to 700 billion and over per year. Much of the country was saving money until those jobs started leaving at such a fast rate.

Now many will say the American people were making to much money wage wise. Many say that because of the price of the products they bought and thought were to high. Well look at what you pay now for those products. At least before the trade that money stayed here. Now it's gone for good once we buy those products.

Last but not least I know this will get a reply about it was Clintons fault for global trade. To folks that say that I always remind them that the House and Senate were nnalert led all through the Clinton years. So that bill had to be presented to Clinton by nnalert. I sure don't agree that Clinton should have signed it but at least he had a plan to help replace those lost jobs. I've seen Bush do nothing in that area but give tax breaks to those wanting to move over seas. So now we're left with mountains of debt from uncheck spending the last 8 years, folks making 8 bucks an hr. that use to make 15 per hour and all Goverment areas coming up short because we're not paying taxes that we did when we had the higher paying jobs.

One thing I wish had been done on the Iraq war is a war tax applied to every working person and company to pay for that war as it went along. We'd have been out of Iraq in 3 years if that had been done. It's very easy to support something as long as it cost you nothing or you think it cost you nothing. Pay Day is here and we can't pay up without some trade deal change. Add that to illegals sending money back to Mexico and you hear that great sucking sound that old Ross talked about.

Yes the American people are way to deep in debt. Yes they don't save enough. And yes they have just figured out what happened to them. It's not going to change until we change the trade deals.

If the government really wants to stimulate the economy stop takeing income tax out of our paychecks for a year.I know.How would the government operate with out our tax dollers. It's like this.They would have to do the same as you and I.Every time my taxes go up I have to do the same with less.It's high time our government learns to do the same with less.

What the heck do you think we were doing over in IRAQ? It's all been over oil!

PAY ME SOME DAMN INTEREST ON IT! My oil company pays me more for any outstanding balance on my Monthly Budget Plan than the damn bank does on my savings.

Current passbook savings are on the order of 1/2 of 1%. Oil company pays me 1.5% on any outstanding balance.

A tax break on savings would help to.

Same problem here.I had a savings account that paid more interest when I was in high school.A half percent wont cover inflation,you are losings money daily.The banks are charging 12% on personal loans.A 6 month CD is a better place to keep most of your savings.Thats only 2.75% now,better than the rip off 1/2 per cent.No taxes on savings account interest would help but it wont happen.Ive been after a friend to get off the credit treadmill for years.Sears called him ,asked why he stopped using his card.They lowered his amount he could charge and upped the interest.He told them he burned the card.

If you're talking about savings as in $$$$ in the bank then the interest rate has to be higher.
On the other hand there are many ways to 'save'
the best is to buy bargains under the market value and sell it for market value or more.Interest on these types 'savings' can easily be over 100% and the Wall St/Banker sleaze bag types don't get a cut of the action.

Not really.It's about military bases in the Middle East.We have to get Saudi Arabias permission to use the air bases to launch any offenses, or use their airspace, against others in the Middle East.

Vito

Between 1800 and 1900, we had deflation in the U.S. During the Civil War the Federal Government sold bonds which were dubbed 720s. They were pegged at 7.2% interest, which equated to 1 cent interest per day, for each $100 face value. Volker, high interest rates, vs. Greenspan, low, forgot more about economics than Greenspan ever knew. No, I do not understand economics; it looks like a maze to me. When water runs up-hill low rates might cure this mess.

my tax guy has been saying this for years.money suposed to change hands seven times.7x 5% = 35%

Keep in mind the Chinese don't have things like Workmen's Compensation, Unemployment Insurance, Social Security, Medicare, 401K, IRA, etc, etc, etc, etc. Add those up and the US worker is putting a pretty large percentage of his paycheck aside.

Economies all over the world are in a recession now, not just the US. Economic cycles happen.

There is no incentive to save any money these days as no one wants to pay you anything for it.My bank checking account pays a whopping .3%. but loans it out for 6-8%. A 1 year CD is 2.2%,a 10 year T-Bond is 2.3%.You just as well stick it under the mattress.

Wall Street and the Hedge Funds want you in the stock market so that they can get their lousy hands on it.For lots of people 10 years worth of gains are gone.In the past 12 months a friend lost from $200,000 down to $100,000 and he's 63 and has no time to build it back.I had mine in safer places and only lost $10,000.

Our economy is now based on borrow and spend and everyone being deeply in debt.Reward people for saving and lots more will start doing it.

Your local Bank already offers that program if you Direct Deposit your paycheck. My part time Paycheck is direct deposited and of that small Paycheck I recieve, $50.00 is directly deposited in a Savings Account which although earnings are low is a convienent way to save for future needs.People with greater earnings could perhaps arrange some other method of Savings. The key is "Direct Deposit".I pay all Statements due"On Line" and save hugely the Postage and Envelopes this would require if using the USPS.

Your right. My wife and I save, not near what we should, but far more than any of our friends. Americans are conditioned to have EVERYTHING, there is no longer wants or needs, just have to have's, regarrdless if they can afford it. I have so many freinds that have $60,000-$100,000 annual incomes, yet have less than $1000 in savings. They cant tell thier kids they can not have some thing because they themselves have to have whatever the Jones's have, one couple has 1 income, a decent income that with 1 kid living at home should be debt free and have a substantial rainy day fund, but since they have to live like their friends that have $150,000 income they have 0% home equity, pay bills paycheck to paycheck and ussually late. They have new vehicles, kid wears name (the trendy) name brand clothes cloths, they each have $6000 sleds, $6500 ATV's, and the nicest of all home appliance and anyting else you can imagine. Two years ago over beers they complained that if the hubby ever had his income cut they would be broke in 1 week. I told them try and sell some of the toys and start making the kid pay for his own clothes, ( he works) and put the saved cash in a CD, and just leabve it. What did they do?? Not one thing, they recieved a tax refund of close to $8,000, and bought a camper with it, so now they also added running 140 miles up north EVERY weekend during the summer.

Just adding another thought to spur income and growth in us job economy.

1.) Voter approved law that congress MUST cut annual spending by 15%, with out touching military or homeland security. Target cutting area's, all government salaries, and per Diem benefits, and any where else that watch dog groups find fruitless spending. Corporations demand this from managers all the time, This is goal, reach it and exceed it, your future with the company depends on it. I know, try getting a lawmaker to write that bill.

2) No sales tax, or tax refund,when you buy a made in the USA product. Create a demand for US made products, an incentive for the jobs to come back.
And to encourage savings>>
3) A tax credit for any one that agrees to take 50% of their tax refund and deposit into a long term CD( or similar saving devise), if they make and early withdrawal, the credit must be refunded to the government.

Well, I guess the best lesson is gonna be for us all to scrape and sacrifice like our older parents and grandparents did when they were young. they learned to live with out, because they had to. If they wanted something they saved for it, when they saved enough they realized they didn't need it, and continued to save for what they NEEDED. Then the next generation inherited it, and squandered it all away, now the cycle starts over again. Lets just pray China, Russia, and our other sworn enemies don't take the opportunity to come together and give us a beat down while we down on the ground.

You nailed it.Especially the part nobody ever remembers,nnalert ran congress when Clinton was President for 6 of the 8 years.

You made several good points. The sad part is that if Congress only appropriated and spent our money on what they are Constituionally allowed to spend it on there would be no problem. A majority of the citizens of the United States who recently voted for the incoming President are hoping for handouts, the rest of us who have to foot the bill should be demanding our rights to ''Goverment by the people'' which implicitly means that our elected representatives follow the law.

Your interest is taxed at you income tax rate.

A very good beaurocrat must spend the budget money each year to be able to get more budget money the next year a proven fact.

1st - increase the interest paid. 2nd - make banks hold their own mortgages. The old pay 4%, lend at 6%, golf course @3. Reinstate Glass -Steagal - so that banks and stocktraders are seperated. Finally, start paying common workers what their worth. Wages in this country have been going down for years.

Well said

I will tell you I have been guilty of debit.
What finnally made me change my mind. I hated working were I was working. I had been there 12 years and by the time we were sold for the 3rd time. It got to be a very very bad place to work. Stress level was through the roof. Working 12 hr days on salary plus doing 1 or 2 hrs of computer work at home.
It was time for a change. Wife and I talked about it. Started looking.

I got offered a job with the power company coop. Great benefits, pension. Every one I talked to who worked there said they were a great company to work for.
But the pay was $3 hr less to start than I was making at the time. Future would be better.
It would have put us into bankrupcy. I turned it down.

That was a moment that changed me for ever. Here I was stuck working for a slave company with no way out. All because I owed for a big screen ( and other stuff).They had all controling power over me. Paid me well enough that I could not leave but not well enough to actually accomplish any thing.

Been paying down debit ever since. Still working at it. tring to get our expences down to one income. That way if one of us has a bad time we are still ok. Almost there.
I did get it down enough to leave the slave job.
Making more now and at a better place.
Never going to let that happen to me again.

Thats how they get you If your a working man. If you want to change fields. you are not going to be able to do it with out taking a cut in pay.

Looking back I am glad that happened. We started our change before this economy went belly up.
So by accedent we are infront of the curve.

When you say the Global trade bill -- if you are referring to NAFTA, then you should know that was 100% Billy Bob Boy -- he signed along with the Canadian and Mexican leaders January 1, 1994. The nnalert led Congress was elected in November of 1994.

Thats why I am talking about a tax break on that money. That in its self is instant interest on your money. many people whould save just to lower thier tax burden. I would.

Dave, I think you are right on. I was just talking to my dad about this yesterday. So many people have all of the fancy toys, snowmobilies, etc. and the six place enclosed trailers to haul them around in behind their new 1 ton crew cab trucks. That is great if they can afford it, but I know of several that are so stretched on credit that it is more about the image than anything else. Miss one paycheck and they are in trouble. I admit that I could be better about saving more, but being 25, I am happy I just bought my first house and hope to have my savings account back to 5 digits by June. It is just a piece of mind issue for me. You have to enjoy it, but be responsible as well. I see many people in my situation who seem to miss the idea of a "starter" house. I do not want to stay in the place that I am at forever, but people need to realize they cannot just jump to have what their parents have right away. Just my two cents.

You are right - I think direct deposit is the key as well!!! My paychecks are direct deposited into my savings account which forces me to trnasfer money out of that into checking which in turn forces me to really question what it is that I am spending it on! I am not a financial expert, but it works for me.

I am not asking that just the interest be taxed at a lower rate. I am asking that the total amout in this account be taxed at a lower rate year to year.
If you dump $2000 into the account. At the end of the year your ballance is say $2012. $2012 is deducted off you gross earings before tax. Then the $2012 gets added back in at a lower tax rate.
The next year. Say your ballance is $4055. At tax time you subtract last years ballance - $2012
Then $2043 is the number you use that year.

Lets say that year your car blew up and you had to dig into the fund. So at the end of the year your only at $1050. Well your not going to get a tax break. But you wont get penalized ether. You just wont be able to take a cut until the ballance gets back over the $2012.

If they did that people whould save more. SOme more some just a bit. The big thing is our money would be in the system. Not Chineese money. because its in demand accounts the bankers would have to be careful with it. because we might come get it.

Quit counting Social Security as "income" and taxing it again!! How can anyone save with ALL the taxes!!?? SIMPLIFY or start over with the tax code!! What a joke!! Charles

If the government would stop taxing income and start taxing consumption it would make a huge difference. Eliminate all income taxes for general government. Replace with a consumption/sales tax on everything but food and medicine. Interest becomes tax free, take home pay jumps by whatever your tax bracket is, etc. Its only when you spend the money that it gets taxed.

Chances are the camper cost over $8000? ie...more payments.

You have to tax everything NO DEDUCTIONS. A person who buys a hot dog pays maybe two cents tax. A person who buys a steak pays maybe fifty cents tax. If you make exemptions you will have lobbyist pestering congress to have their product exempt and we get right back in the same old mess again. You eliminate IRS and all current tax codes.
this plan does it all

The same folks that laugh at my old 1983 19 inch TV with rabbit ears, are the same ones that are always wanting to borrow money from me... No, I do not lend, I have learned my lesson..
I know people that are hiding from the repo men, but still have the premium cable, rented Entertainment centers, kids have cell phones, etc. They feel that these things are a right.

Dave you have some very valid points, but have you ever dug into what homeland security realy is under the flash and promtional speaches to make us feel good?

It is like a farmewr I know, is a great guy that will do anything for you type. He puts three log chains around most of his cattle gates. Yet wires them together with a small wire as a splice link.

Another example is your house door being locked. Any professional fire department spends 20 seconds at a door, if they are not through it in twenty seconds they find a different way in. If your house door has glass in it you punch your fist through and turn the handle. Any windows in your house? I learned I could break them at a very young age.

Homeland is even more stupid than that, but most of us feel good at night knowing we have it.

Our fire department took advantage of the free money, and got alot of it by our terms of lots. But there are so many strings attatched that is mandated afterwards, it takes up alot of that money jumping through the hoops they demand. We feel that perhaps if we had it to do again we would decline trying to get the free funding.

When they first started to give out grants, no department could fill out the application forms. It cost us $400.00 to have a profesional person who was certified to do it fill them out. Just like the lottery, they do not refund your money if you loose. We were (I think) eight times more likley to have three firemen killed by lightning than to recieve the money. The second or third round it did get better, and we did win.

A salesman that is a good friend said in one town in NE IA he sold two sets of turn out gear to a single fire department for each man. They have a rural department and a city department, use the same trucks out of the same building for both, as well as firemen. I don't recall the exact numbers, but rough figures are $1,200 per man. On that department I would guess those dollars are more than the total budget for two years would be.

It is simply another burocrocy to make some folks rich, and to create more government jobs that require more taxes.

The general thought is a great idea, but then the lobby beasts get in on the deal, and all common sence is plowed under.

If we require our government to cut spending by any percent, they will first give managment a raise, and then take away our police protection, EMS, fire, garbage etc.

We all know our political friends on both sides of the tractor shed are helping only certian tractor sponcers out.

But - the problem in the USA right now is that folks aren't spending. Seems that is the root of our problems????

So, your comment is unAmerican - we need to spend more, not save more.

Or, so we are told by the govt/ media/ etc.

I'm not saying what I believe, just what I hear.

--->Paul

My income is taxed after my s.s. is withheld. How is that taxed again?

I like that idea. How can we get it going?

the goverment would never let that happen because money means power. and they want all the power they can get

Try the credit card. Banks give around 5% interest, and cc charge is 18%,Oz has about 39Bn on cc's.
Idiots in my opinion. Lots getting into trouble with this downturn.Once upon a time [fairy tale] you were given a limit on the strength of your ability to pay it back,then Wall Street activities filtered down to us, CC limits were increased without consideration to the incomes, notices sent to all.Look, you now have this limit.
Idiots,, beauty, so off they go and spend it,getting deeper into the mire.Then the @@it hits the fan. deep trouble, some people had $100,000 on these cards, at 18% so you see why I call them idiots. Must have, Must have, mentality. Some people are alike no matter where they live.
One or two Court cases, claiming the banks were aware of their income so should not have loaned the money, failed in their duty of care.

Consider this.. The only threat to Israel was Saddam because he hit some of their towns with rockets.He did not allow Terrorists to operate nor did he embrace Osama.The Bush administration [heiarchy] was made up mostly of whom.?
There were NO WMD's, NO threats to America, NO
Uranium.
GWB was bushwacked by his advisers who were?? It's so much easier if you get others to do your bidding.

Might help but now interest on savings is taxed just doing away with income tax on savings interest would help.I personally want as little to do with banks and mainstream financial institutions as possible