TOPSY-TURVY NEO-ECONOMICS IS ENCOURAGING CIRCULATION OF WEALTH AND NOT STASHING IT WHILE BORROWING AND SPENDING AND PAYING BACK THE LOANS INCREASING THE ECONOMIC STANDING IN THE NEW WOLRD ECONOMICS INDIA COULD DO THIS IF IT BECOMES SUSTAINEDLY SUPER-PRODUCTIVE LIKE THE U.S. AND THE OTHER DEVELOPED MARKET ECONOMIES

Interesting article written by an Indian Economist
Japanese save a lot. They do not spend much. Also, Japan exports far

         more than it imports. Has an annual trade surplus of over 100

billions. Yet Japanese economy is considered weak, even collapsing. 

Americans spend, save little. Also US imports more than it exports.

         Has an annual trade deficit of over $400 billion. Yet, the American

economy is considered strong and trusted to get stronger.

 But where from do Americans get money to spend? They borrow from
 Japan, China and even India.
Virtually others save for the US to spend. Global savings are mostly
 invested in US, in dollars.

India itself keeps its foreign currency assets of over $50 billions in

         US securities. China has sunk over $160 billion in US securities.

Japan's stakes in US securities is in trillions.

 Result:


 The US has taken over $5 trillion from the world. So, as the world
 saves for the US - Its The Americans who spend freely. Today, to keep
 the US consumption going, that is for the US economy to work, other
 countries have to remit $180 billion every quarter, which is $2
 billion a day, to the US!

 A Chinese economist asked a neat question. Who has invested more, US
 in China, or China in US? The US has invested in China less than half
 of what China has invested in US.

 The same is the case with India. We have invested in US over $50
 billion. But the US has invested less than $20 billion in India.

 Why the world is after US?

 The secret lies in the American spending, that they hardly save. In
 fact they use their credit cards to spend their future income. That
 the US spends is what makes it attractive to export to the US. So US
 imports more than what it exports year after year.

 The result:

 The world is dependent on US consumption for its growth. By its
 deepening culture of consumption, the US has habituated the world to
 feed on US consumption. But as the US needs money to finance its
 consumption, the world provides the money.

 It's like a shopkeeper providing the money to a customer so that the
 customer keeps buying from the shop. If the customer will not buy, the
 shop won't have business, unless the shopkeeper funds him. The US is
 like the lucky customer. And the world is like the helpless shopkeeper
 financier.

 Who is America's biggest shopkeeper financier? Japan of course. Yet
 it's Japan which is regarded as weak. Modern economists complain that
 Japanese do not spend, so they do not grow. To force the Japanese to
 spend, the Japanese government exerted itself, reduced the savings
 rates, even charged the savers. Even then the Japanese did not spend
 (habits don't change, even with taxes, do they?). Their traditional
 postal savings alone is over $1.2 trillions, about three times the
 Indian GDP. Thus, savings, far from being the
 strength of Japan, has become its pain.

 Hence, what is the lesson?

 That is, a nation cannot grow unless the people spend, not save. Not
 just spend, but borrow and spend.

 Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told
 Manmohan Singh that Indians wastefully save. Ask them to spend, on
 imported cars and, seriously, even on cosmetics! This will put India
 on a growth curve. This is one of the reason for MNC's coming down to
 India, seeing the consumer spending.

 'Saving is sin, and spending is virtue.'

 But before you follow this Neo Economics, get some fools to save so
 that you can borrow from them and spend !!!

 It is very simple to be happy, but very difficult to be simple.

 Have a nice day !!