For the last several years the global economy has been driven by American’s insatiable want, and China’s increasing willingness to supply. The US’s current account deficit is huge, in 2005 we had the largest negative balance $ -829,100,000,000. China and Japan had the largest positive balances, but it still takes the surpluses from at least eleven countries to finance the US’s deficit.
Many Americans are quick to blame the Chinese and their pegged currency for the colossal account deficit, but revaluation of the renminbi would hardly help the world economy… Or the US for that matter.
One of the reason for the account deficit is that the American people don’t save. How many people do you know who spend their paycheck as soon as they get it? Or worse, before they get it.
Saving allows the US government (and companies) to borrow your money to finance public projects. With the current rate of savings in the US at zero the government has to borrow from others, and foreign investors are all too willing to let the American people go on being a nation or debtors.
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