Money has no value unless you spend it.....Thought provoking logic
>
> This is a crazy world!
>
> 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.' Buy Honda Cars if you want
> the Indian economy to grow.
>
> But before you follow this Neo Economics, get some fools to save so
> that you can borrow from them and spend !!!
Source: mail from a friend
CAclubindia
