. . . And a nightmare to others. Focus on stocks and home prices is not a rebuttal to a low savings rate but an indictment of monetary stimulus by the Federal Reserve.

If the fiscal spending was used rather than fiscal stimulation of taking on debt, debt that is sure to boost asset values rather than wages (as wage increases lead to the devil of inflation), then we would today be talking about inflation. Today, instead of inflation we should be talking about wage deflation, and the falsity of the CPI and the horrible inequity of boosting asset prices (a de facto increase in money supply) and slamming anything that leads to wage increases.

What does Julie Tripp have to say?

What then, constitutes 'savings'?" she asks.

Good questions, Veva.

We went to Kevin J. Lansing, senior economist at the Federal Reserve Bank of San Francisco, for answers. Lansing and his former colleague, economist Milt Marquis, say the government's method of figuring the personal savings rate is flawed. It overstates consumption and understates saving.

The personal savings rate is the ratio of personal savings to disposable income. Disposable income includes wages and salary, proprietor's income, transfer payments such as Social Security, interest and dividends and rental income, after taxes are subtracted. Essentially, savings, then, are defined as the amount of after-tax income left after household bills are paid.

The money Enghouse invests in mutual funds or stocks for her grandchildren is counted in the savings rate. But the dividends or interest earned on them are counted as income. Moreover, the growth in share price of the stocks and funds -- the capital gain -- is not counted into her savings as she accumulates or sells them.

Ditto for real estate: the huge appreciation in home values Portlanders have seen over the past two decades doesn't count either. The $200,000 gain you made on the house you bought in 1990? It's real money when you sell, but it doesn't figure into the national savings rate.

Increases in the value of your assets stimulate consumption in a phenomenon economists call the wealth effect, and that's what Americans have been banking on instead of savings accounts for the past two decades. When you see your net worth rise on brokerage statements and real estate appraisals, you feel richer and you spend more. The opposite happens when your assets decline in value, notes Lansing. Then you buy less and save more, as happened briefly after the technology stock crash in 2000, and during the Depression.
[ Flaws in think tank's methods blur U.S. savings rate ]

She expresses confusion but is at least getting closer to asking the right question.

Ask about what will happen to home prices when two trillion dollars of mortgage debt with ARM's rolls over to higher demands for payments . . . particularly for the poor owners that are already at the edge of their capacity to pay the "introductory" offer to buy a home on a margin account?