Tapped Out

Post #1040

Using a boxing/fighting analogy, the U.S. economy is currently “on the ropes.” After each new year of production, there is no longer enough in savings to fund future investments:

The reason for less-and-less savings each year is relatively simple: government growth.

Back in 1965, LBJ’s Great Society welfare/warfare state was just getting off of the ground, and there had not been a lot of government growth. But almost as if a light-switch was turned on in 1965, government growth embarked on a new, 60-year path.

To turn things around — so that the USA has “a future” — changes proposed in this prior report could be implemented. The flat national sales tax would increase savings, directly countering the decline. In contrast, business-as-usual will not be an option, as the graph shows it to have now eaten away at all of our future productive potential.

Reference

U.S. Bureau of Economic Analysis, Net saving as a percentage of gross national income [W207RC1A156NBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/W207RC1A156NBEA