World Economy: Retrenchment ahead for all Americans - by Gregg Erickson
American families are now borrowing more than they save, producing what economists call "negative" savings. American corporations, fat with profits, are net savers, but those corporate accumulations are canceled out by the chronic deficits being chalked up by the U.S. government. The three sectors - households, corporations and the government - constitute the whole of every economy. In America, that economy is deeply in the red.The significance of this is no secret. Chinese and other Asian savings finance American debts and deficits, which have allowed American households and government to consume goods and services far in excess of what Americans can produce and pay for from current income.
"Negative saving would seem to point to growing indebtedness and, ultimately, a decline in living standards, as Americans tighten their belts to pay off debts," was the lifeless way economists at the Federal Reserve Bank of New York recently put it. A day of reckoning must come when Alaskans and all Americans will be in for some serious retrenchment.
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