enough to offset the debt economy?
dubious
dubious
Once consumers are maxed out, how the heck will they spend in the future? Surely the fed knows this and has a viable plan. Else, they are kicking bigger problems to the future, aren't they?
There was a recent article by NYT about the Chase Sapphire Reserve credit card. Look at the comment section, most don't know how to do cost benefit analysis. All they saw was a $450 annual fee. A good amount still talk about paying with cash only.
This doesn't mean I'm much better off. When you mentioned debt super cycles I have no idea what you mean. I'm only starting to get into economic theories. I'm 27, can be considered upper middle income, and given millennial income calculators in top 1% of earnings (not saying much since most people in the valley can get that, ~$70k income for that level). These theories does not have a perceived effect on people's day to day lives. So a lot don't know about them or don't care. Example, every few weeks I see an article in the front page about negotiating salary. This isn't a gauge of knowledge, but of interest. Everyone goes through negotiation situation, value is obvious, more people learn about it.
I read the article [1] because I was dubious about the potential cost/benefit given that I pay zero dollars in interest on my cards (I pay the statement balance every month), and I found that the benefit is for rewards programs.
My understanding is that rewards programs are an arms race: the merchants cover the extra rewards amount. That means that they're bundling the cost of rewards into their products anyhow and charging you for the "pleasure" of getting your money back. If you can get in on it before the costs rise to the full amount of the reward, then other people subsidize your reward by purchasing the cost-adjusted product without getting rewards. I'll pass on paying $450 to further that, no cost-benefit required.
1) http://www.nytimes.com/2016/09/13/business/dealbook/credit-c...
This type of subsidizing happens around us, one that comes to mind is taxes. 401k and other tax shelters. People that are taking the greatest advantage of these have money to spare, and read up on the advantages (or hired someone that has).
Also, since you pay off your statement every month, reward cards make a lot of sense. Haven't seen one that requires a revolving balance. For me it's about optimizing returns on spend I already have.
Mixed up my numbers, top 1% for age group ~106k. Bay Area metric I make more than median household, which is scary since that means the average single income family in the Bay Area would be barely scraping by (not hard to believe).
Every debt is matched by an equal and opposite asset. Savings create debt.
http://www.investopedia.com/terms/b/bank-deposits.asp
E.g. you give a bank $1, it creates a liability for $1 on its balance sheet, and it also goes out and lends that cash to someone (allowing it to create debt somewhere else).
The question you should be asking is not the total level of debt, but which groups in the economy are indebted. I agree that consumers as a whole should have positive savings.
Beyond that, I said "and" not "or". Interest rates and savings should be organically tied together. They should signal each other. Nowadays, they do not.
The 0% bound you see today is the lesser of two evils.