The pervasive narrative of homeownership as the primary path to middle-class wealth accumulation requires a fundamental rethink.

Financial savings cannot exist without a corresponding liability. Every act of saving requires another party to issue a claim, either as debt (like a loan or bond) or equity (company shares). This creates an interdependent circuit where savers and borrowers are linked.

Income inequality is the primary driver of the "savings glut," which forces down interest rates and compels the creation of risky debt, leading to a debt trap. The pre-1980 era demonstrates that a more equitable income distribution, supported by progressive taxation and strong wage growth, enables stable, income-based spending and low household debt. In contrast, the post-1980 era shows that rising inequality creates a structural need for debt-based spending to sustain demand

The United States absorbed global and domestic excess savings from 1980 to 2007 by continuously expanding its liabilities.

This essay explores how excess savings—when individuals or institutions aim to save more than others are willing or able to borrow—can destabilize an economy.

The United States absorbed global and domestic excess savings from 1980 to 2007 by continuously expanding its liabilities.

Today, there are enough labor and raw materials to satisfy demand. It is the asynchrony between demand and supply that hinders the organization of labor and raw materials to produce enough goods and services for every body.

The United States absorbed global and domestic excess savings from 1980 to 2007 by continuously expanding its liabilities.

Overheated economies—marked by excessive credit growth, asset bubbles, and inflationary pressures—require carefully calibrated countercyclical policies to prevent destabilizing boom-bust cycles.

Overheated economies require carefully calibrated countercyclical policies to prevent destabilizing boom-bust cycles.