Marty Olney - who is far too smart and charming of a woman to be relegated to permanent adjunct professor status even at UC Berkeley - provides Wonks Anonymous with the graph for the day via the SF Comical.

American's savings rates from 1950 to the present:



Now one of the ideas of Supply Side tax cuts was that we did not save enough and, if we raised real returns on savings through tax cuts targeted at the rich, savings rates would rise and the nation would be awash in a sea of capital.

Looking at this graph one is tempted to conclude that the supply side tax cuts, which came into full effect in about 1982, triggered the long term savings slump.

This is probably not entirely true. One can see sharp drops for the stock market bubble of the 1990's and the recent housing bubble - times when consumers were fooled into think that they were already rich. Still 1985 and the years following were not bad times - for a Republican administration - and there were no major bubbles.

What gives?