Japan

["Gregoire de Nowell (ci-devant)" <GN842@xxxxxxxxxxxxxxxxx>]

I note in the economist that gross domestic savings in japan
is a wopping 30% of GDP.  I also note that the interest rate
on the long band dipped blow 2% fot he first time; short
rates are at 0.5%.  It seems to me taht the high savings
rate has bid up the price of financial assets and lowered
the real interest rate.  It would be interesting to know
what level of consumption Japan could sustain w/a lower
savings rate.

One solution for the Japanese might be to increase consumption
by lowering taxes and running a bigger deficit, leaving
more money in the hands of consumers and also giving them
a larger supply of bonds for which to bid.  But suppose that
consumptive tendencies are *not* unlimited and that generations
of thrift would simply lead to more savings?  It would seem
to me that the govt may not be in a position to rely on
consumers to consume.  It might be prudent therefore to
achieve a higher deficit by increasing expenditure on public
goods.   It is difficlt to imagine what kind of quality
of life such a colossal public works program would purchase.
"The streets would be paved with gold."

'Nuff for this topic.

greg nowell