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To: GST who wrote (60377)	6/3/1999 11:36:00 PM
From: BGR	Read Replies (1) \| Respond to of 164684

GST, My comments about savings and investments were flat out wrong. I take that back. Investments are different from savings and I must have been hallucinating when I wrote that. But. Net income minus net expenditure at the national level equals net savings minus net investments which in turn equals the trade deficit. During Rubin's tenure the trade deficit has stayed more or less the same as a percentage of the GDP. Hence, the amount of national borrowing (as percentage of GDP) needed to compensate for consumption growth over income growth must have been pretty constant over this period as well. In other words, consumers may be borrowing more, but are producing more as well at about the same pace. By the same logic, the middle part of the equation must have stayed pretty much flat over the years. So, what is compensating for the negative savings rate and positive growth in investments? Think about the US budget deficit, as savings has public and private components. As the public is saving less, the Govt. is saving more (less demand for treasuries) which is making up for the increase in investments. Overall, quite a balanced situation IMO. -BGR.