In last Tuesday’s Financial Times, Martin Wolf did an excellent job explaining how various global imbalances interact and how one country trying to address its imbalances may have consequences on others, perhaps especially the United States because its economy, and imbalances, are so big.1
Among the biggest of these imbalances is the global savings surplus and the US federal deficit, which, at this point, rather balance each other off. The question is, if the United States actually reduced its fiscal deficit, what would happen to those with savings surpluses.
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