The author asserts that the immense pyramids of debt built up by the Anglo-Saxon half of the world, and the equally massive mountains of savings created in the other was the CORE PROBLEM of the past 10 years.
Almost everything that occurred in the past couple of years was, directly or indirectly, a consequence of this.
No one should have let the USA or the UK run such large deficits, and the Chinese such vast surpluses, over such a long period. And yet both got away with it, in what must count as the most momentous economic policy failure in modern history.
Those imbalances created the mountain of money that fed the frenzy of mortgage lending and eventually caused a financial crisis.
Any person who believes that government can prevent the business cycle is inane. Usually it is the cause of exacerbation.
This is economic stupidity, in my humble opinion. Why go to the effort to chase ofter the lowest tax bite when changing our taxation systems to encourage personal savings and capital investment not leaving the country makes far more economic sense?
I will ping this one later. But my comment is that it will take more than conservatives (really republicans) and liberals (democrats) offer us, which is more tax cuts AND spending.
Boom-bust ping.
"In order for the world economy to recover, the big savers will have to start spending, just as governments and consumers in countries such as Britain will have to borrow less. It would be nice to assume that this will happen automatically. But given the disaster our misshapen international economic system has foisted on us, we can hardly rely on such an outcome. "
"Opportunities to overhaul national economic policies happen every 20 years or so. Opportunities to reshape the framework that binds nations the rules that determine the flows of capital, the behaviour of exchange rates and monetary policy happen even less frequently, usually after a war or a financial crisis. "
The author does not know Americans very well!