>Liberals like to say there's an investment deficit;...>>
Public investment deficit.
<<I do believe that EPI has devoted no small amount of paper to making that argument. But since, as Keynes said, investment and saving "are merely alternative names for the difference between income and consumption," then how can you say the investment rate is too low but that savings are irrelevant?>>
Savings are irrelevant in the sense that savings do not "cause" investment; or policies to boost savings don't work (don't cause savings, or don't cause investment). That savings equals investment is an accounting identity, not a theorem on behavior.
<<Usually laments about low savings rates come packaged with austerity and upwardly redistributive policies, yes, and personal savings aren't the only kind, but don't you think a savings rate below 1% is a sign that something's wrong?>>
Yeah, low income. Income causes savings and investment, Keynes sez and I concur. For more profound guidance, consult a real macroeconomist. I'm a tax/budget guy.
<<Can an economy sustain itself by consuming 100% of personal income (which means lots of borrowing by the bottom 80% of the income distribution)?>>
Sure if it doesn't mind its capital stock being owned by foreigners. Not my preferred policy, BTW.
MBS