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!
