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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (61082)12/27/2006 8:51:23 AM
From: KyrosL  Read Replies (2) of 116555
 
Hi mish. John Succo's refutation of excess savings makes no sense. He writes:

It is not the excess savings of Chinese investors that are buying U.S. securities. It is central banks creating credit themselves to buy those securities.

The reason foreign central banks create credit in the local currency is to mop up dollars earned by their trade surpluses. They then use these dollars to buy US securities. It is precisely those excess savings that generate the trade surpluses. That's economics 101.
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