The wealthiest ten percent of Americans control 50% of the country's wealth, but they control 85-90% of its savings. It doesn't matter how much the bottom 90% save or spend, it cannot compensate for the excess wealth that is taken out of the economic system by the ultra-wealthy. The only way the economy has been able to limp along is that the bottom 90% have been borrowing money from the top 10%. Eventually that money had to be paid back - with up to 30% interest. It is the physical impossiblity of doing this that caused the economy to collapse. If you want to help people understand the collapse, look to economic disparity as the key. It does no good for the wealthy to invest their savings in industry if those industries are not paying their workers enough to buy the goods they are making.

Dear Mr. Solmon,

I thoroughly enjoy your News Hour features and especially appreciate your use of analogy/parable...tonight it was the bees. However, I came away with a question about who is saving and what are the sources of the increased savings? Is this information based on what individuals have placed in savings accounts? If so, many people chose to move assets from the market into savings accounts in order to protect them from future loss. I personally would not categorize this as "saving" but rather protecting ones existing assets, i.e., these monies were intended for growth outside the traditional savings account and not for spending. I suspect that there also are people who are moving monies from checking accounts into savings accounts because of concerns about bank security....however rationale that may be. So, the crux of my question is how well do we understand the factors that have determined recent increases in the level of savings. Thank you for your consideration of my question.

Sincererely,

Linda Chiarello

Tonight's was the same pomposity that Solman has been peddling for the past year. It is not reporting, but editorializing. There is no paradox of thrift, it is a matter of productivity, like interest rates. Interest rates decline naturally when productivity increases and less input is required to make more output. At the same time less thrift (or saving) is required. Keynesians fail to appreciate this simple equation. Poor ppl who are not very productive necessarily require more savings, than those who are more productive. There is nothing more credit can do to improve this situation, but it will help if poor people do not try to sell exclusively to those with established money, but rather to themselves. We have been living off the poor around the world for decades now, and it is neither good, for them nor for ourselves. But Keynesians refuse to recognize moral hazard at all. Would increasing the importation of heroin be the answer to the war in Afghanistan? Would paying more ransom to pirates help the situation in Somalia? Would everyone purchasing inflation-protected securities make us all richer? Would paying Solman more help the world economic crisis?

And so far is he from Solman's interpretation, Mandeville agrees. What he says is that any REAL virtue in the world must be built on the selfishness of man (which he probably got from Grotius). He even suggested, like Malthus, that charity schools be closed, because even children only work from necessity. Here is the conclusion from the introduction to the universally recognized edition of his works by F. B. Kaye:

"With some such summary of Mandeville's philosophy I shall close this discussion, for the reading of hundreds of estimates of Mandeville's thought has impressed me with the fact that it is as important to explain what Mandeville did not mean as what he meant. A recollection of the following negative propositions, already elaborated in this chapter, will save the reader some perplexity.

Mandeville did not believe that all vice is a public benefit; he held the converse-that all benefits are based on actions fundamentally (according to his rigoristic definition ) vicious.

He did not believe that one could never tell right from wrong.

He did not believe that virtue was arbitrarily 'invented'.

He did not deny the existence of the sympathetic emotions such as compassion, but merely refused to term them unselfish.

He did not deny the existence of what is usually termed virtue, but only maintained that it was not true virtue.

He did not believe that all extravagance and waste were good for the State.

He did not believe that vice should be encouraged, but merely that some vices 'by the dextrous Management of a skilful Politician may be turned into Publick Benefits'"

This edition in online here: http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=1863