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Econ Videos 79 videos

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Econ: What are National Savings? 1 Views


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What are National Savings? National savings is a US Commerce Dept. estimate, based on voluminous data, as to the rate of savings among companies, government and individuals after a tally of total expenditures has been deducted from income. For most of the latter 20th century to the present, the National Savings rate has been lower due to government deficits.

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Transcript

00:00

And finance Allah shmoop What Our national savings The term

00:07

national savings refers to the total of all private and

00:11

public savings in a country All the money socked away

00:15

for you know that rainy day you get your monthly

00:17

paycheck you pay your rent you buy food and shell

00:21

up cash for your utilities your Internet service your phone

00:24

a few trips to the go kart track and maybe

00:27

buy your mom flowers for her birthday Well at the

00:29

end of the month you have twelve dollars seventeen cents

00:31

a left That goes into your savings account the same

00:35

starter savings account you first opened when you were twelve

00:38

Well that twelve dollars seventeen cents also gets counted in

00:41

the national savings total Well your twelve dollars seventeen cents

00:45

gets added to the one hundred million dollars or so

00:48

that a hedge fund manager made and paid himself for

00:51

basically pushing people's money around and taking a big fat

00:54

fee for it So he keeps that money That's his

00:56

savings And then you have all the other money saved

00:59

by people in companies and governments in the country They

01:01

all get added up All of that dough is totaled

01:04

two comprise the national savings well in practice The national

01:07

savings figure isn't calculated by adding everyone's bank accounts Jeff

01:12

Bezos Finances are much more complicated than those in York

01:15

you know junior savings account which still entitles you to

01:18

a lollypop with every deposit It might be hard to

01:21

get a firm grasp on just how much money Bezos

01:24

has saved a pay for the eventual vacation community on

01:27

the moon he plans to build with Ellen Moscow actually

01:30

may be the new one is going to be built

01:31

on Mars What do you think Well getting those savings

01:34

numbers may be difficult to get Teo because well for

01:36

Bezos and Musk most of their wealth is in stock

01:39

It hasn't been converted to cash savings so it just

01:42

sits there and it goes up with the market or

01:44

a little better than the market these days anyway Meanwhile

01:46

other people are burying cash in Mason jars in the

01:49

backyard In case you know the zombie apocalypse comes back

01:52

and all the bank's just go away or shut down

01:55

we're getting a good estimate on these totals in total

01:58

savings numbers is difficult So instead of adding up all

02:01

the savings account totals National savings is calculated a different

02:05

way Instead the figure is computed by taking the amount

02:08

of money people earn in a period when just subtracting

02:11

the amount they spend Yes very clever Well people either

02:14

spend or save their money That's the assumption here What

02:17

they didn't spend well they must have saved right Well

02:20

in terms of an equation national savings equals disposable personal

02:25

income minus personal consumption expenditures That's the big equation Well

02:30

disposable personal income represents the amount left over in people's

02:33

paychecks after they pay their taxes The amount they have

02:36

available to spend or save is you know what's left

02:38

well Meanwhile personal consumption expenditures represent the spending total The

02:43

difference between the two Well that's what's been saved when

02:46

comparing country's national savings is given as a rate like

02:50

big countries will always have a big total for savings

02:53

but it doesn't mean that they're good at saving So

02:56

to compare you need to compute a rate of savings

02:59

So for that computation to take place you take the

03:01

amount saved and calculate the ratio of that number with

03:05

the country's GDP That figure then gives you the national

03:09

savings rate Some countries save a lot Others say very

03:12

little So you know on one end of the spectrum

03:15

you've got the Singapore here It had a national savings

03:18

rate of Yes forty six point five percent of GDP

03:21

in two thousand seventeen Close toe Half of the money

03:24

earned in the country went to savings on the other

03:27

end You've got grease Hello Bankrupt Greece Yes we feel

03:30

your shame Savings rate of only ten point nine percent

03:33

in two thousand seventeen Little over ten percent of the

03:35

money earned their got saved Meaning Just under ninety percent

03:38

of it got spent as soon as it arrived Well

03:41

the U S is a lot closer to Greece Sadly

03:44

on the list it's gross National savings rate told seventeen

03:47

and a half percent in two thousand seventeen And before

03:49

you start yelling at your family at the next Thanksgiving

03:51

about how they need to save more the low savings

03:54

rate is largely the government's fault Yes White House We're

03:57

looking at you National savings includes government figures Well part

04:01

of the issue for the U S is that the

04:03

federal government runs a heavy deficit mat number that spend

04:07

leaps into the overall savings rate for the country for

04:10

the federal government ran a deficit of six hundred sixty

04:13

five billion dollars in two thousand seventeen cost us a

04:16

fortune and it had taken off a lot of our

04:18

twelve dollars seventeen cent deposits into our junior savings account

04:22

Tio you know cancel all that huge government debt out

04:25

So what We just eat it That's it National savings

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