Neo-Economics- A different viewpoint

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   Here's a sightly differernt view on the Indian concept of saving, boarders views are invited....

NEO-ECONOMICS
"SAVING IS SIN, SPENDING IS VIRTUE"

-- 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 $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
itÊ¼s 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......