From: Harald_Schumann at spiegel.de Received: from notes2.spiegel.de (notes2.spiegel.de [112.11.0.2]) by mail.spiegel.de (8.8.4/8.7.3) with SMTP id SAA25370 for <lbo-talk at lists.panix.com>; Thu, 6 Aug 1998 18:57:23 +0200 (MET DST) Received: by notes2.spiegel.de(Lotus SMTP MTA v1.1 (385.6 5-6-1997)) id C1256658.005D6901 ; Thu, 6 Aug 1998 19:00:17 +0200 X-Lotus-FromDomain: SPIEGEL To: lbo-talk at lists.panix.com Message-ID: <C1256658.00588EB9.00 at notes2.spiegel.de> Date: Thu, 6 Aug 1998 18:54:51 +0200 Subject: RE: Jonesing for the Dow Mime-Version: 1.0 Content-type: text/plain; charset=us-ascii
Doug Henwood wrote:
"Liberals like to say there's an 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? 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? Can an economy sustain itself by consuming 100% of personal income (which means lots of borrowing by the bottom 80% of the income distribution)?" Of course it can. The only additional factor needed are the savings of the rest of the world. Does not the current account deficit (this year probably around 220 billion $) and the corresponding capital account surplus explain the whole story? But as long as the US economy can attract all this foreign capital with the promise of high yields and relative exchange rate security, this can go on for a long time. Don't you think so?
Harald