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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 379.91+0.4%Nov 11 4:00 PM EST
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To: Moominoid who wrote (31895)3/30/2008 4:17:12 AM
From: elmatador  Read Replies (1) of 217694
 
Explanation why stimuli don't work. If you're optimistic, what you would hope would happen would be something like this: U.S. households will slowly save a higher proportion of their income, as indeed they almost certainly should.

Government expects the consumer to take their money and go shop while the consumer needs to save? Stimuli doesn't work.

And the U.S., in aggregate, will save a higher portion of its income, as it should. This will be offset by an improvement in the U.S. external account, a reduction in the current account deficit and therefore reduced borrowing abroad, which will be replaced by household savings at home. Because the dollar is very weak, exports are doing rather well, so indeed net exports are improving. That is offsetting the increase in savings, but it can't do it very quickly.

Here you can see that only by saving and exporting more, the US can come back to its feet.

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