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 imports 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, America! ns 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, that 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. 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
its 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. "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.



This is what US has successfully done in last few decades