TE:
Look at the polar opposite: Japan.
The more we consume the more they save.
The more they save at 1% the more we borrow at 5%.
The more they save at 1% the more attractive the project at 3%, the less productive the high achievers, the lower the growth, the lower the wealth creation.
The more we borrow at 5% the more we need projects returning 8%, the more productive the high achievers, the higher the growth, the higher the wealth creation.
Along this spectrum lies, say, Japan at one end and the US at the other with nations in the middle. If everyone gravitates to the saving end, with Japan, where we all payback debt, look what happens to productivity and wealth.
On the other end, with borrowing and the need for high returns, comes productivity increases, where great innovation occurs.
I know this may only be completely true in theory but in actuality much applies today. I cannot see how lasering out US demand will either help global demand or productivity. Some other nations need to become investors (in productivity), consumers (of innovation) and wealth creators (aside from copying the US and exporting it cheaper).
This could take awhile.
D |
