Article written by an Indian Economist

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 $800
> 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
> $100 billions in US securities. China has sunk over
> $600 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!
>
> 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 $100 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 that
> 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 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. This is one of the reasons for MNC's
> coming down to India, seeing the consumer spending.
> "Saving is sin, and spending is virtue".
>
> But before you follow this neo economics, get some
> fools to save so that you can borrow from them and
> spend!