… it is important to remember that China is a fast growing developing country. Ordinarily such countries are expected to run large trade deficits. The idea is that capital can be better used in fast growing countries like China than in slow growing wealthy countries. Since capital will get a higher return in developing countries, we expect capital to flow from rich countries to poor countries. The flow of capital would imply a trade deficit for developing countries. Effectively this trade deficit would allow developing countries to sustain consumption levels even as they build up their capital stock.
China, along with many other fast developing countries, is running a large trade surplus. This is not sustainable…
The other part of this story is that we really have no choice about seeing the dollar fall, especially for those ferocious deficit hawks who want to see the United States balance its budget. It is an accounting identity that the trade surplus is equal to net national savings. This means that if we have a trade deficit, net national saving is negative. There is no way around this fact. The deficit hawks may not like it, in the same way that they may not like 2 plus 2 being equal to 4, but there is nothing they can do to change it.
If we have negative national saving, then either we have a budget deficit (negative public saving) or we have negative private saving, or some combination. At the moment, we have a large budget deficit that corresponds to our trade deficit. How could we have negative private saving?
06:50 AM - October 25, 2012
Audit Notes: dethroning DeMarco, the cult of disruption, China trade
The FT reports Obama plans a big housing policy change if re-elected
Hey millionaire tech bros: Have patience with the editorial process - Chris Hughes probably wanted to enable great journalism at first. Then the dust settled and before you know it, he’s shaking everything up again
Serial creators don’t know what will happen to Adnan Syed - New developments in his legal case suggest that the outcome is wide open
Price hike at UC Berkeley’s journalism school - Governing body approves additional fee of $7,500 starting 2016
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FOIA reform dies while the press looked the other way - RIP Improvement Act of 2014
Email blasts from CJR writers and editors
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“I remained silent and didn’t know what to say — I know how such attacks on schools usually end”
“This was not planned. She called in on the normal line.”
“People deserve to know that the American government (proudly!) did things that in any other context are called torture”
Greg Marx discusses democracy and news with Tom Rosenstiel of the American Press Institute
Who Owns What
A report from the Columbia University Graduate School of Journalism
Questions and exercises for journalism students.
Hey millionaire tech bros: Have patience with the editorial process – Chris Hughes probably wanted to enable great journalism at first. Then the dust settled and before you know it, he’s shaking everything up again