And if the private sector runs a surplus, the government has to run a deficit.
And by surplus, I mean saving, and therefore, private saving must equal a government deficit; otherwise, the equation doesn’t balance because, in accounting, and this is important, credits and debits always match.
This is based upon sectoral analysis, because of course it is. But sectoral analysis only balances if you include foreigners. Which is important in a country that runs a large trade deficit and therefore a large capital acount surplus….
As Tim points out there are three sectors, not two – private sector, government and overseas. If the government chooses to live within its income then private sector saving will reduce the trade deficit, private sector dis-saving will increase the trade deficit.
Stop buying junk from China = private sector saving, it does not equal creating a public sector deficit
This seems to be the view that the government must be run (in part) for the benefit of private savers. This is hardly the government as ensuring public goods view of the world. Spud’s gone for the rentier class on this. Imv of course.
“sectoral analysis only balances if you include foreigners”
Ah, but once the One World Government begins, and Murphy is installed as Supreme Protector, that will become irrelevant.