Posted by: michaeldavidpower | November 19, 2009

Savings surplus vs savings deficit

If, according to Bernanke, the East is saving too much and, so by extension, the West is saving too little, what is the ‘just right’ Goldilocks level of savings in the world? The equilibrium of nothing? Then there would be no investment and so no growth.

And if, according to Friedman, an individual can have a life-cycle savings hypothesis, can a nation have one too? If so, then China as a young economic power presumably SHOULD save more? But how much is too much for China to save? And how do you measure the ‘just right’ level of savings given where a nation is in its life-cycle?

Or are the Americans bleating because they have eaten all their sweets but China hasn’t?

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