>It is impossible to over-emphasise the fact that the entire fiscal
>plan which the authorities have set out, since it combines a rising
>budget surplus with continued economic growth, can only form part of
>a coherent macroeconomic strategy on the assumption that private net
>saving continues to fall into increasingly negative territory. If
>saving does not continue to fall - if private expenditure rises less
>than income in the years to come - this must (by the laws of
>accounting) be accompanied by some combination of a deteriorating
>budget and an improving balance of payments. And this could only
>happen (given fiscal stance and trade propensities) if aggregate
>demand and output were to stagnate or collapse. Without a continued
>stimulus from private expenditure in excess of income growth, there
>would be nothing to keep the expansion going.
Is there anything wrong with this? Is there another possible outcome? Or do normal accounting identities not apply to the USA?
Doug