Most likely, they could state, does not the United States have low cost savings price, well below its investment price?

Some observers might object to the interpretation. And doesn’t that prove that the usa needs savings that are foreign?

Certainly not. While this ended up being the way it is into the nineteenth century, if the united states of america imported capital given that it lacked enough domestic cost savings to finance its investment requirements, it is not any longer true in the twenty-first century. In place of presuming, because so many economists nevertheless do, that the United States imports international cost savings because U.S. cost savings are way too low, it is important to observe that U.S. cost savings are low considering that the United States imports international cost savings.

The reason being a nation by having a capital account surplus must, by definition, operate a current account deficit, and because investment for the reason that nation must, additionally by meaning, surpass cost cost savings.

Read more