07 Oct 2009

Geithner Lectures Americans on Saving More

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The audacity of these people is astonishing:

“Everyone is going to have to come to terms with the fact that we are going to save more in the United States,” Geithner said in an interview with German weekly Die Zeit, conducted on Sunday in Istanbul, and due to appear on Oct. 8.

“If the U.S. starts saving more, that changes the whole world’s economic reality,” he said, according to the German text of the interview.

Note that Americans have been trying to save more, but their efforts have been just about perfectly offset by the federal government’s profligacy. (Paul Krugman had an unintentionally humorous post on this, where he charted this relationship–and claimed that the government had saved the day.)

Think of all the federal efforts designed to reflate the bubbles in our economy–they’re trying to stimulate credit card purchases, car purchases (“cash for clunkers”), and of course home purchases. The reason they felt the need to “save the credit markets” was to keep people borrowing. And let’s not forget the Federal Reserve’s nearly 0% target interest rate.

I know, I know, Krugman et al. could give a very scientific explanation for why we need to borrow several trillions of dollars in the near term, but then we have to reverse it in the medium term. Still, Geithner lecturing us on saving more is a bit like General McChrystal deploring America’s culture of violence.

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