House of Paine

part whole pot holes part VI

if 
 the globe's
 households 
 are borrowing more
         they 
on the whole 
         can't be saving  any less 

its an accounting identity after all....

so whats the fuzzz and fusss ?



=========================================


 now of course 
  i'm being an ass here

only in
 an ivy tower chat booth 
could one 
use such a magnificent abstraction 
                           as 
                       the globes households

melting away all intermediary institutions 
                              and borders etc etc 

but here's my point

when the households 
       of ugly Amerika
are  press lashed
   for private  borrowing binges 

this fails to point out
the golden grace notes


in the last analysis 
their hog troughin
       sops up 
  someone
   overeseas
          excess savings 

why excess?


cause the planet is plagued with great private extractors
whop need to park their winnings 
some where comfortable 

why no  higher interest rate crowding out ?

because these same extractors 
   can't locate enough  
 (profit productive)
 investment alternatives
          anywhere 
 on the face of the earth 

and so
 their bankers
 by routes circuitous
   resort to
large-scale  usery 
      ie 
  consumer loaning
and gubmint
household  transfers 

why amerika ?

 because  amerika 
 has the highest
 credit rating


why ?

because
we have the greatest  safest
         real assets
       to serve as ultimate  co lateral 

 -----------------------------

on a side issue ....

  amer households'
 total borrowing 
         vs
 amer  households' 
          total savings 

both might be rising



the net result
adding together 
saver homes and borrower homes 
now near zero

     tells little
 of  all its submerged
                micro B's and S's 

--------------------------------

back to global matters...


master  green-jam
   tells us 
the zyztem 
 has developed 
 a  built in bias 
         towards  
               "savings gluts"


why important ?


has  the press mob 
    never heard of
 the paradox of thrift  ?


aka
 the  possibility
of  another
   great depression 


here's the paradox


for thriftees 
a phase in the industrial cycle
 where savings actually fall
         because
  the  aggregate atttempt to over save
at a time of under investment
leads to  falling output 
and lower actual savings 

yes martha 
there are times and places
where saving 
is a curse 

and the globe needs 
  a big spender's
            heedless blowings 
to keep us all  sailing along.....

meet uncle sam 

-----------------------------------------

appendex


glut sources 

case one 

country A 'S  policy
                     of
         SUSTAINED TRADE SURPLUSES:


endangers  the optimal level of
                         global output 

un-countered by deficit nations

surplus leads to deflation 
                 deflation
  produces global 
   production  slack 
opportunity cost of spending out of additional borrowing?


zero 

win win
in a pirates game of course

ie capitalistic constraints 

---------------------------------
but even so

in such a system

 how's  deficit king  amerika 
any more a   culprit
 say  then
      the  surplus thirsty 
sino-japanese megaplex  ?

so long as 
     we all accomadate each other

which so far we  do 

we're 
the odd  boobsee twins

opposite equals 

-----------------------------
 re cap:

 behind all this 
     looming 
    global savings glut?

a  fear 
of a global deflation 


only to be expected 
with all these 
great transnational  
  private extractors flying around

it takes a big rich  borrower
    to keep
the system cookin along