Hard landing; soft landing?

People are discussing whether the historically low national saving rate matters.

National saving can be expressed as the national income identity:
NS = S – BD = I – B, where
NS = national saving
S = private saving (personal & business)
BD = budget deficit
I = investment
B = foreign borrowing

Private saving, S, is much lower than it used to be. To maintain an adequate level of investment, I, either the budget deficit must decrease or foreign borrowing must increase. Both these are at historically high levels with the budget deficit trending much higher over the next ten years.

Some people claim foreign borrowing could be a big problem. If the U. S. can no longer borrow overseas to fund consumption and investment, this could cause a collapse in the economy: the housing market for one. Others, market fundamentalists, take a benign attitude toward it by claiming that a combination of income, price, interest rate, and exchange rate adjustments will lead to a soft landing. It’s like living in the best of all possible worlds. It makes for interesting debates and predictions.

The discussion obscures some real issues. For an increasing number of Americans, the American dream—such things as decent housing, health care, education, and a job that allows people to participate as citizens in governing their country—is becoming out of reach. One needs to dig deeper than the algebra to discover these issues.

Why don’t people save enough money? Some don’t have any money to save. It’s much better to be a CEO. You get paid a princely sum whether you succeed or fail. Soft landings and hard landings are rather academic discussions to them.

I suppose I’m oversimplifying as usual. (Shrug. Sigh)