Saving is sin, and spending is virtue...

An interesting article on USA's Spending, written by an Indian Economist:

Japanese save a lot. They do not spend much. Also Japan exports far morethan it imports. Has an annual trade surplus of over $100 billions. YetJapanese economy is considered weak, even collapsing.Americans spend, save little. Also US imports more than it exports. Has anannual trade deficit of over $400 billion. Yet, the American economy isconsidered 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 forthe US to spend. Global savings are mostly invested in US, in dollars.India itself keeps its foreign currency assets of over $50 billions in USsecurities. China has sunk over $160 billion in US securities. Japan'sstakes in US securities is in trillions.Result:The US has taken over $5 trillion from the world. So, as the world savesfor the US, Americans spend freely. Today, to keep the US consumptiongoing, 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 inChina, or China in US?
The US has invested in China less than half of whatChina has invested in US. The same is the case with India. We haveinvested in US over $50 billion. But the US has invested less than $20billion 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 morethan what it exports year after year.The result:The world is dependent on US consumption for its growth. By its deepeningculture of consumption, the US has habituated the world to feed on USconsumption. But as the US needs money to finance its consumption, theworld provides the money. It's like a shopkeeper providing the money to acustomer so that the customer keeps buying from the shop. If the customerwill not buy, the shop won't have business, unless the shopkeeper fundshim. The US is like the lucky customer. And the world is like the helplessshopkeeper financier.

Who is America's biggest shopkeeper financier?
Japan of course. Yet it'sJapan which is regarded as weak. Modern economists complain that Japanesedo not spend, so they do not grow. To force the Japanese to spend, theJapanese government exerted it self, reduced the savings rates, evencharged the savers. Even then the Japanese did not spend (habits don'tchange, even with taxes, do they?). Their traditional postal savings aloneis 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 justspend, but borrow and spend. Dr. Jagdish Bhagwati, the famous Indian-borneconomist in the US, told Manmohan Singh that Indians wastefully save. Askthem 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. :))