A Good Article on Economy - Written by Indian Economist.

Facts or fiction? Very interesting……….

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 $400
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 $50
billions in US securities. China has sunk over $160
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! Otherwise the US economy would go for a
six. So will the global economy.The result will be no
different if US consumers begin consuming less.

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 $50 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 what
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 it self, 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. "Saving is sin, and spending is virtue."


Before you follow this neo economics, get some fools
to save so that you can borrow from them and
spend.....???????