Friday, June 26, 2009
More proof that Gov't is the net supplier of private savings
Latest personal income and spending data released
Personal income rose by $173 billion in May from April, however, private wages and salaries fell by $12 billion. So where did the gains come from? Government spending. Gov't transfer payments (social security, medicare, medicaid, disability payments, unemployment insurance, etc) rose by $162 billion. The rest of the gains came from higher interest payments that the government paid, $8 billion.
Private savings went from a record nominal amount of $602 billion in April, to another record nominal amount of $769 billion.
By the way, savings did not come from people spending less as we often are told. Personal consumption declined by only $62 billion from Q1 2008 to Q1 2009, and private wages and salaries declined by $140 billion. Yet savings grew by over $400 billion! There's no way you can lose $140 billion in income and spend $62 billion less and come up with $400 billion in additional savings! No way...mathematically impossible unless the savings just fell out of the sky.
Basically, that's what happened...
GOVERNMeNT IS THE NET SUPPLIER OF PRIVATE SAVINGS!!!
If you don't see this by now you're blind!