

Household debt is holding back the US economy - cs702
http://cs702.wordpress.com/2011/11/18/household-debt-is-holding-back-the-u-s-economy/

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dotcoma
Yeah, you can't spend money you don't have forever.

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jtardie
The Fed keeping interests rates as low as they have punishes savers. Can't put
all the blame on households for that.

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cs702
The Fed wants savers to invest in riskier things -- new businesses, new
projects, expansions, etc. -- so it has pushed rates on safe investments like
treasuries to zero (three-month US treasuries pay 0.01% right now). The idea
is that this will provide an incentive for savers to invest in things that
will produce economic growth.

Yet despite the Fed's success at pushing rates down to zero, savers _still_
want to invest predominantly in assets perceived to be safe (like treasuries
and FDIC-insured bank accounts).

When consumers are strapped under the yoke of debt and can't buy more stuff on
credit, no government effort to get businesses to invest more can work...

