ETF Trends
ETF Trends

As the economic downturn has worsened, we’ve been cautioned to keep saving. Strangely enough, a huge number of Americans are taking that advice. But now some thing those frugal savers could be dooming the economy and exchange traded funds (ETFs).

The so-called  epidemic of saving and trying to play it safe in an effort to shore up for whatever the economy can throw at us is the new “normal” for many hard-working Americans. Over the next few months, a searing debate over paying for the nation’s trillion-dollar deficit with new tax increases on the rich will divide the country by class and political ideology, reports Jon Markman for MSN Money.

The economy is poised to sink more deeply into a recession and bear market that will provide shockingly less income for authorities to tax. In response, many Americans (both employed and unemployed) have stopped spending money on anything but the absolute essentials.

However, is spending whether or not you can afford to the right answer for the problems that lie ahead for the U.S. economy? This assumes that spending money can somehow solve problems that were caused by irresponsible spending, says The David on Pimp Your Finances.

The second problem with blaming savers is that it assumes businesses and consumers are obligated to act with the best interests of the national economy in mind. But do you think businesses do what’s best for their bottom line, or do they sacrifice themselves for the sake of the greater good; in other words, you?

Investors should still be contributing to their 401(k)s. As the markets begin to rebound, there will be some bargains out there and any more cash you’ve contributed will go even further. As for individual savings accounts, people who contribute to them are exhibiting wise behavior. If this crisis is what it took for people to learn to live within their means and stop living on credit, aren’t we better off in the long run?

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.