Conflict with Roubini-Setser

It is basically a conflict with the standard macroeconomic concept of Current Accounts balances. They contend it remains basically a difference between National Savings and National Investments. National Savings being the greater, then there will be a Current Accounts surplus, with a Current Accounts deficit if National Investments are the greater. They account the Trade deficit as lack of Private and Public savings. This author agrees as to the lack of Public savings--Federal, State, and Local. He disagrees about the lack of Private Savings, finding private savings rates to have actually increased since the early 1990s.

The discrepency comes in alteration of Corporate Accounting procedures, specifically, in the extension of Consumer credit alongside its forms of payment. Corporations utilize Accounting procedures to delay payment of Production Costs by using their domestic currency savings accounts until Consumer credit payments replenish those domestic savings accounts. The Profits from Production Corporations have been shipped Overseas for investment in foreign economies. Private Individual savings since the 1990s has been on the rise, but shifted in great proportion to Corporate stock, either individually, or through Mutual Funds and Index Funds. These individual funds work themselves through the financial system, turning into a net outflow of currency Overseas. A simplier explanation simply states American Private savings have been shifted to foreign investment, while domestic investment has been turned over to financial institutions to fund through demand deposits.

The Corporate Accounting procedures allow these foreign investments to be listed as liabilities, limiting both the payment of American taxes and dividends to American stockholders. This author believes American National Savings is higher than it has ever been since the 1940s, but the Profits from the National Investments are not realized by Corporate control of the funds. lgl