"The Global Savings Glut" by Robert Samuelson of the Washington Post.We are all taught that saving is good -- indeed, Americans are often chided for spending too much and saving too little. But what if the problem of today's global economy is that people elsewhere -- in Europe, Asia and Latin America -- are saving too much and spending too little? Former Princeton University economist Ben Bernanke argues that this is precisely the case. He calls it "the global savings glut."
The power of a good idea is that it dispels common confusions. Bernanke's global savings glut is just such a notion. It helps explain (a) the huge U.S. trade deficits; (b) the weakness of the current economic recovery (now 3 1/2 years old); and (c) the difficulty of doing anything about (a) and (b).
As a rule, saving is good. It helps individuals afford big-ticket items (a home, college tuition), protect against emergencies and prepare for retirement. For societies, it provides funds for productive investments in new factories, technologies and businesses.
This article is hilarious. The economist who came up with this latest excuse for our irresponsible economics reminds me of small children when they are doing something very naughty. "He MADE me do it," the child whines while pointing to usually a smaller and younger child. Good mothers seldom are impressed with this sort of reasoning.
There is no "global glut in savings". There are many billion and millionaires who squirrel massive amounts of money out of country so it won't be taxed or traced. We see how they operate like at the trial of the CEO of Tyco
. he wails, "I didn't know where the money came from or where it went, the kids over there made me lose all that money and bankrupt my company!" Of course, the kids over there were all in his pay and under his supervision.
Modern supervison in America: far from super like Superman seeing through walls, this super vision is blind as a bat. Especially when committing crimes.
You can bet the millions this childish CEO "lost" became lost when it flew overseas to dissappear into that vast stew of semi legal or outright illegal slush funds. This money doesn't come from an army of grannies saving pennies and carting them to the bank every week. This money comes from drug lords, international terrorists, military/industrial contractors especially in America, gun runners who do business with everyone and movie moguls.
They created this huge fund that moves about sort of like Jabba the Hut, slumping and sloshing about seeking to devour more international print outs. For the USA has been printing money like crazy and shipping it out so it won't cause inflation at home and this spongey creature is sucking it all in.
This is seperate from Government banks. We all know they have been suctioning off money thanks to manipulations of currencies in the "open" market which is really a rigged game run for the benefit of currency dealers and governments in collusion with various entities at home. For example, Japan keeps the yen in a very narrow range, the "red" zone being 100 yen to a dollar. They move heaven and earth, shifting funds, buying dollars and buying American debts to keep this steady state going in their favor.
China does this too, they learned how from the Japanese. The Chinese are playing a different game, though. They aren't as interested as the Japanese at keeping American market share no matter what, they are concerned with sabotaging America's increasingly fragile economy.
So the money pours into America. As other countries go begging for funds, the Great Players pour money into America's ever gaping maw. We burp and tell other nations begging for money to "pony up and pay up" and to pay high interest rates and other dreadful handicaps which they can't afford. Then we go back to slurping with Jabba the Hut, happy as a pig in a poke.
Unfortunately, this feast is doomed to end with our slaughter if we don't wake up.
We are doing this to ourselves. The world will or won't save whatever but we certainly can clean house and stop this mad train of events. We are not helpless little children, we are the world's biggest empire and greatest power! Therefore, we can and should be shaping events instead of blaming others and then going out begging and stealing.
This is what Superchild Barneke and the writer of the Washinton Post whine: Whatever the problems, Americans can't fix them. The common view that our budget deficits (which Bernanke correctly thinks should be reduced) cause our trade deficits is simply wrong. The two are only loosely connected. That unconventional conclusion is also inconvenient, because it measures our powerlessness.
When the helpless giant, America, collapses, don't expect mommy to pick us up and change our diapers. Expect to be eaten by wolves. And no one will weep for us.
This article is courtesy of Paul who alerted me by email. Thanks!