> 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?
Sort of. It's not mostly a government decision, it's mostly the result of decisions by households and businesses (along with the federal budget and monetary policy.) If we don't save enough to pay for all our investment, we have to borrow from abroad. We don't save much.
> 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.
Sounds like well-off people in your town are spending a lot, rather than saving. This is part of the cause of the savings deficit. If spare cash is plowed into high-end consumer goods instead of being saved, that contributes to the deficit. When the big-box stores want to expand, they have to borrow (or draw down their savings). Either way, they have to dip into the pool of national saving. If there's not enough saving they have to borrow from abroad (directly or indirectly).
I think the stuff you're seeing has more to do with things like the eroding manufacturing base, declining unions, inadequate health coverage (which can push people onto the streets), etc. The savings deficit probably doesn't have much to do with it, since it's not being felt right now (due to foreigners helping out with their lending.)
Seth