Trump's 'trickle-down' tax reform

[Ktoyou]

It's an interesting article, but he kinda skips over the causality. His argument that we import a lot because we save little isn't actually an implication of "saving minus investment equals exports minus imports". The same identity and math can be used to argue that Americans save less because they are buying a bunch of goods from overseas. And if you think about it, cheap imports would be an obvious impetus for a shift from saving to spending of that magnitude. Of course, it's also true that there are few incentives for saving in an economy where interest rates are low and it's hard to make any money that way, but even when interest rates were high, we had a high trade deficit.

You are correct in that he is over simplifying the essence of his thesis. If we call savings, all assets in income sources, like bonds, and CD, passbook savings and money market accounts, then we need to consider these in parts. Passbook and money-markets, along with CDs are good for banks but not the same as corporate bonds, which allow companies to invest and grow.

If we call investing holding stocks, then companies are able to hold more value, yet one begets the other, so, savings and investments are relative.
The exception is not investing, but spending, putting money into the economy.

If he was able to tease all this out, he would have written a text to teach from, not just a journal article to sell subscriptions.

It is still one of the better reads I have seen from the source and worth a some contemplation.

I know, you are focusing on the national debt, yet trade debt is now a news issue, and much easier to explain. The debt is actually where the government barrows from anyone who owns treasury bonds. People do not hold those bonds to ransom the government, as they are very conservative investments. Actually, the US bonds are the best for some earning and stability. There are some 'emerging markets bonds' where investors speculate, buy for short-term trades, or short, but that is risky and requires investment expertise.