[lbo-talk] question on savings

Lou Johnson loujohnson705 at yahoo.com
Fri Feb 11 21:13:35 PST 2005


So there could be plenty of excess capital (savings), but if the feds would rather borrow from abroad than tax it to fund their operations, we have a national savings deficit?

The terminology seems designed to distort the facts on the ground. I see some people in our small town with LOTS of spare cash. I see some economic arenas apparently booming (i.e. new big-box stores being built). But other businesses are closing, non-profits are shutting their doors, people are getting laid off, and our homeless shelter is at maximum capacity. Most of the jobs in the paper are for truck drivers.

I'm trying to understand why.

Seth A:

Le Monde was referring to insufficient U.S. *domestic* saving. We generate too little saving at home, so we have to supplement it with foreign savings, mostly in the form of foreign purshases of U.S. bonds. It's probably true that bubbles usually happen when there's a lot of "excess" capital sloshing around. But in the late 90's, for example, a lot of that capital was coming from abroad.

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