Personally, I save between 15 and 25% of my income, depending on how you count things like 401k employer matching contributions, principle payments on a mortgage, and bank savings account savings that in practice I use now and then for big ticket items.
Plenty of Americans save material portions of their income, especially from middle age to retirement, as opposed to when just starting out. But their gross savings are partially obscured by net borrowing of others. Much of it investment in education, some of it just economic cycle or life cycle smoothing of their lifetime income. The recession cut off a ton of net borrowing by deadbeats, and that alone contributed to the savings rise.
Next to the underlying error. Debt is not unsustainable. Debt is not evil. Debt is not negative net worth. Debt is merely one form, one of the two major forms, in which assets are financed (the other being equity). It is entirely normal for total debt outstanding to rise continually, because the total value of all assets owned by Americans also rises continually. By large amounts, over full cycles. 7% a year on average since World War II.
The British government has had debts outstanding since the mid 18th century without the slightest ill effects to anybody.
Nor are investments magically more virtuous when financed 100% out of prior savings of the investor, than when half of the amount is borrowed, instead. If an investment is stupid, you can invest 100% equity out of income savings into it, and still lose every penny of the investment, and still suffer all the consequences of economic dislocation that such loss of capital entails. Not just for the investor, but for everyone else, all of whose activities adapted to his plans and commitments and demand, and have to readapt again when he comes a cropper.
If on the other hand an investment it financed by debt (the horror, the horror), but fully earns the returns the investor hoped for and expected when he decided that was a safe course of action, then it will fully cover the cost of that debt and fully justify that debt's value, in an increase in the total value of all assets combined.
Good investment makes debt sound, bad investment makes equity unsound. The form is not relevant to the outcome.
When too much debt is used to carry assets with *volatile* returns, rather than *low* or inadequate ones, it can cause a different problem - transfer of the assets to the lenders at the bottom of volatile swings, and messy fights over them sometimes. For that reason, there is a level of debt that is prudent for a given kind of asset, that depends on the smoothness or lack thereof in its returns.
That is really quite completely all.
Debt isn't negative net worth because somebody owns it. You can't borrow from the Great Pumpkin in the Sky. It is a liability to the borrower but an asset to the lender. One entry accounting is, again, at the root of every common economic fallacy.
“So you’ve never smelled money, your problem.”
What does that mean?
No country in the history of the world borrowed their way to wealth.