Hi,
We received this mail today from some one
Read this... We all think that buying foreign goods will weaken our economy but there is some controversy....
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 itʼs 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.
This is what US has successfully done in last few decades
From India, Mumbai
9We received this mail today from some one
Read this... We all think that buying foreign goods will weaken our economy but there is some controversy....
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 itʼs 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.
This is what US has successfully done in last few decades
From India, Mumbai
Vwey interesting.
Where the US is concerned, it is like the cart pulling the horse all right.
Where Japan is concerned, it shows that excess of supposedly good is bad.
Japan maybe an exceptional case but where the US is concerned, one wonders how long that can continue. As long as the country or the person continues to earn handosmely, thee is nothing wrong in this really. Spending drives the economy.
From India, New Delhi
Where the US is concerned, it is like the cart pulling the horse all right.
Where Japan is concerned, it shows that excess of supposedly good is bad.
Japan maybe an exceptional case but where the US is concerned, one wonders how long that can continue. As long as the country or the person continues to earn handosmely, thee is nothing wrong in this really. Spending drives the economy.
From India, New Delhi
Interesting One.
One single solution cannot drive India to the top.
It has to be number of steps and the biggest is to develop suitable environment to get more females to work and contribute to economy by earning and increasing pace of our growth
From India, Mumbai
One single solution cannot drive India to the top.
It has to be number of steps and the biggest is to develop suitable environment to get more females to work and contribute to economy by earning and increasing pace of our growth
From India, Mumbai
Interesting article :)
However this cannot continue for a longer period. Whenever the economy of a country is weak it cannot bluff or sustain for a longer period.
Even in the US case, it is showing.
See the property market, see there dollar falling, even after the Indian Govt. trying to prop up the dollar. You are right when you say that all the Govts. are hoping and making an effort to see that US doesn't go down under, as it would be a great loss to their countries.
Very interesting and thought provoking.
From India, Mumbai
However this cannot continue for a longer period. Whenever the economy of a country is weak it cannot bluff or sustain for a longer period.
Even in the US case, it is showing.
See the property market, see there dollar falling, even after the Indian Govt. trying to prop up the dollar. You are right when you say that all the Govts. are hoping and making an effort to see that US doesn't go down under, as it would be a great loss to their countries.
Very interesting and thought provoking.
From India, Mumbai
This is how rich people in India spend, save and invest their money - InvestmentYogi How rich in India spend, save and invest their money? -
From India, Hyderabad
From India, Hyderabad
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