The corporate sector is the big net buyer in the stock market through soaring acquisitions and stock buybacks. The officers and directors of publicly traded corporations receive huge amounts of their wealth from stock options. In the new economy, buying an existing plant beats creating a new plant. The creation of paper wealth by driving up stock prices takes precedence over creating wealth through building new factories. Hot stock prices foster runaway consumer buying, to the point consumers now dominate the economy.
Savings are the building blocks of civilization.
Comparing present economic and financial conditions with those in the late 1920s is a shocking exercise. In the 1920s there was zero inflation. America has the lowest domestic savings of all time and the biggest trade deficit of all time. Ominously, corporate profits, as measured by the official income statistics, have been virtually flat for more than two years, even though the economy has been booming at record growth rates. The stampede of both corporations and private households into debt during recent years is without precedent.