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Article written by an Indian Economist

Discussion in 'Jokes' started by priyauc, Nov 5, 2007.

  1. priyauc

    priyauc Bronze IL'ite

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    Japanese save a lot. They do not spend much. Also
    > Japan exports far more than it imports. Has an annual
    > trade surplus of over 100 billions. Yet Japanese
    > economy is considered weak, even collapsing.
    > Americans spend, save little. Also US import more than
    > it exports. Has an annual trade deficit of over $800
    > billion. Yet, the American Economy is considered
    > strong and trusted to get stronger.
    > But where from do Americans get money to spend?
    > They borrow from Japan, China and even India.
    > Virtually others save for the US to spend. Global
    > savings are mostly invested in US, in dollars.
    > India itself keeps its foreign currency assets of over
    > $100 billions in US securities. China has sunk over
    > $600 billion in US securities. Japan's stakes in US
    > securities is in trillions.
    >
    > Result :
    >
    > The US has taken over $5 trillion from the world. So,
    > as the world saves for the US, Americans spend freely.
    > Today, to keep the US consumption going, that is for
    > the US economy to work, other countries have to remit
    > $180 billion every quarter, which is $2 billion a day,
    > to the US!
    >
    > A Chinese economist asked a neat question. Who has
    > invested more, US in China, or China in US? The US has
    > invested in China less than half of what China has
    > invested in US.
    >
    > The same is the case with India. We have invested in
    > US over $100 billion. But the US Has invested less
    > than $20 billion in India.
    >
    > Why the world is after US?
    >
    > The secret lies in the American spending, that they
    > hardly save. In fact they use their credit cards to
    > spend their future income. That the US spends is that
    > makes it attractive to export to the US. So US imports
    > more than what it exports year after year.
    >
    >
    > The result :
    >
    > The world is dependent on US consumption for its
    > growth. By its deepening culture of consumption, the
    > US has habituated the world to feed on US consumption.
    > But as the US needs money to finance its consumption,
    > the world provides the money.
    >
    > It's like a shopkeeper providing the money to a
    > customer so that the customer keeps buying from the
    > shop. If the customer will not buy, the shop won't
    > have business, unless the shopkeeper funds him. The US
    > is like the lucky customer. And the world is like the
    > helpless shopkeeper financier.
    >
    > Who is America's biggest shopkeeper financier? Japan
    > of course. Yet it's Japan which is regarded as weak.
    > Modern economists complain that Japanese do not spend,
    > so they do not grow. To force the Japanese to spend,
    > the Japanese government exerted itself, reduced the
    > savings rates, even charged the savers. Even then the
    > Japanese did not spend (habits don't change, even with
    > taxes, do they?). Their traditional postal savings
    > alone is over $1.2 trillions, about three times the
    > Indian GDP. Thus, savings, far from being the strength
    > of Japan, has become its pain.
    >
    > Hence, what is the lesson?
    >
    > That is, a nation cannot grow unless the people spend,
    > not save. Not just spend, but borrow and spend. Dr.
    > Jagdish Bhagwati, the famous Indian-born economist in
    > the US, told Manmohan Singh that Indians wastefully
    > save. Ask them to spend, on imported cars and,
    > seriously, even on cosmetics! This will put India on a
    > growth curve. This is one of the reasons for MNC's
    > coming down to India, seeing the consumer spending.
    > "Saving is sin, and spending is virtue".
    >
    > But before you follow this neo economics, get some
    > fools to save so that you can borrow from them and
    > spend!
     
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