From CNBC, an article about the savings habits of the wealthy:

According to research from American Express Publishing and Harrison Group, the savings rate of the wealthiest 1 percent soared to 37 percent in the second quarter. That's up from 34 percent in the second quarter of 2012-and more than three times their savings rate in 2007.

I don't have all the income figures handy but if the savings rate of the top 1% is 37% and the total personal savings rate is roughly 4%, it doesn't take a rocket scientist to figure out that the bottom 99% aren't doing much saving. The rich really are different - they have enough left over after paying the bills to actually stash away some hefty savings. The article also points out that the wealthy are holding a lot of this new savings in cash:

A separate study from Bank of America recently found that 56 percent of millionaires have a "substantial" amount of cash. Only 16 percent of them plan to invest that cash in the next couple of months. And only 40 percent plan to invest it over the next two years.

Meanwhile, the hoi polloi are trying to make up for the lack of savings by taking more risk with what little they do have:

U.S. equity funds saw a record inflow of $40.3 billion in July, according to data from TrimTabs, as the S&P 500 and Dow Jones Industrial Average scale new heights in what some are calling an "invincible summer" for the country's stocks.

After largely sitting out one of the greatest cyclical bull markets in history, retail investors are now plowing money into stocks. By the way, the previous record monthly inflow was in early 2000 so if you put money into an equity fund last month, history probably isn't on your side. I suspect this will not turn out well but maybe buying stocks at high multiples, near all time high profit margins amid slow growth will be different this time. The bulls better hope so.

These two stories are a microcosm of the inequality problem that continues to bedevil policymakers. There are a lot of causes, from a lousy education system to globalization to our screwed up monetary system but what it really boils down to is that the wealthy have more capital than everyone else. And those who work for it continue to accumulate it through a healthy savings habit. The middle class needs to save more and the ability to do that can only come from two sources - spending less or making more. For a lot of people the first option isn't really much of an option at all and rising education and healthcare expenses are making it harder. (Just as an aside, have you ever wondered why the two sectors of the economy with the most government intervention also happen to have the highest rates of inflation?) So, that leaves the second option and President Obama's only answer seems to be to take some from the rich, run it through the government skimming machine and hand out what's left to the rest of the population. The Republican answer is the same one they've been touting since the Reagan glory days - cut taxes and pretend to cut spending. I don't know about you but I'm tired of hearing the same proposals that I've been hearing for the last 30 years. I think it is time to try something different.

I have some ideas on a truly different approach that I'll be writing about in coming weeks but here's a teaser. What if we could reduce everyone's income tax rates, including corporations, solve the offshore profit hoarding problem and provide higher quality job opportunities for the middle class? I think we can but it will require that we touch the third rail of economic policy. More to come....