Big savers got us into this mess, as well as big spenders.
The world is trapped in a global savings glut. It is both the source of our economic woes and an obstacle to the task of pulling ourselves out of the ditch.
Worse yet, the glut’s continued existence will feed a succession of asset bubbles until we confront it, head on, and find ways to soak up the excess.
Yes, we can blame the City and Wall Street for turning the global savings glut into fissile material. But that’s like saying, “hyenas do what hyenas do”. Given extraordinarily lax regulation and a flood of money to play with, bankers were just acting according to their incentive schemes. They merely took advantage of the opportunities the glut presented. The real culprits are thrifty Germans, and state-owned enterprises in China – along with governments of other countries, of course, turning a blind eye to the escalating problems.