Re: [Pen-l] Krugman on the global Paradox of Thrift

[Carrol Cox <cbcox@xxxxxxxxx>]

Jim Devine wrote:
> 
> > The New York Times/March 2, 2009
> > Opinion: Revenge of the Glut
> > By Paul Krugman
> > The international economic crisis is the revenge of the
> > global saving glut. And the glut is still out there, worse
> > than ever.

Let me see if I understand this.

If there is a glut of savings, those savings are saved somewhere: bank,
treasury certificate, what have you. Now wherever they are saved, that
borrower of those savings can't bury them in the back yard of the
corporate headquarters; they have to be invested? Correct?

But if they _were_ invested, then there wouldn't be a glut.

So there must not be anyplace to invest them? No one has anything to do
with them that would provide a greater return than the various interest
charges add up to?

So a glut of savings means a paucity of investment opportunities?

So where in the hell are those savings and what are they doing?

Carrol

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