Re: Article in THE ECONOMIST by Davidson

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

The font of liquidity isn't an drain on total savings but it does disrupt
the world wide pattern of long term savings.

Harry Veeder


> From: Gunnar Tomasson <gunnar.tomasson@xxxxxxxxxxx>
> Date: Sat, 14 Sep 2002 11:01:24 -0400
> To: pkt@xxxxxxxxxxxxxxxx
> Subject: Re: Article in THE ECONOMIST by Davidson
>
> Re. the following:
>
> According to Mr Davidson, the world cannot risk America stopping. America's
> external deficit means an extra $500 billion is going into circulation in
> the world economy each year. If America reined in its current account,
> international commerce would suffer a liquidity crunch, as it did
> periodically under the gold standard. Hence America's deficit is neither a
> "meaningless concept" nor a lamentable drain on world savings. It is an
> indispensable fount of liquidity for world trade.
>
> Comment.
>
> The spigot on this "fount of liquidity" is controlled by America's
> debtors/deficit spenders and creditors/deficit financers, none of whom give
> a hoot about the world economy when looking out for Number One - and quite
> properly so.
>
> When either side acts to put the punch bowl aside, there will be
> consequences - for the world economy and those 'regulators' of the world's
> monetary affairs who have looked the other way for the past three decades.
>
> Gunnar
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> ----- Original Message -----
> From: "Ric Holt" <rholt@xxxxxxx>
> To: <pkt@xxxxxxxxxxxxxxxx>
> Sent: Friday, September 13, 2002 1:25 PM
> Subject: Article in THE ECONOMIST by Davidson
>
>