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  • August 25, 2009 at 1:58 PM #16246
    AK
    Participant

    The Krugmans of the world are fond of pointing out that the public debt reached 120% of GNP by the end of WW2, so the paltry trillion-dollar deficits of our age are nothing to worry about. Lately Robert Reich has joined the chorus. I was rather disappointed as I’ve always seen him as one of the more intellectually honest pundits on either side of the political spectrum.

    Here’s what I felt compelled to post on his blog today:

    ———————————

    Sure, the U.S. had ran huge public deficits during WW2 … but at the same time the private savings rate was off the charts. Net private saving peaked at $45.6 billion in 1943, bigger than the federal and all state government deficits combined!

    Of course savings were high … defense plants paid good money (courtesy of the public deficit), war bonds were “patriotic,” and rationing meant there was little to buy anyway.

    When the war ended and the militarized economy switched to producing consumer goods, people started spending. Net private savings plunged. I wonder if we’ve ever reached those WW2 levels again as a percentage of GNP. Certainly it took until 1961 to reach wartime levels in terms of raw numbers ($49.3 billion).

    Where are the vast sums in private savings that will make up for government deficits and fund our recovery now?

    August 25, 2009 at 4:42 PM #448907
    CricketOnTheHearth
    Participant

    Spot on.

    August 25, 2009 at 4:42 PM #449098
    CricketOnTheHearth
    Participant

    Spot on.

    August 25, 2009 at 4:42 PM #449439
    CricketOnTheHearth
    Participant

    Spot on.

    August 25, 2009 at 4:42 PM #449510
    CricketOnTheHearth
    Participant

    Spot on.

    August 25, 2009 at 4:42 PM #449695
    CricketOnTheHearth
    Participant

    Spot on.

    August 25, 2009 at 4:48 PM #448912
    Rich Toscano
    Keymaster

    Great post AK. As for this part:

    [quote=AK]Where are the vast sums in private savings that will make up for government deficits and fund our recovery now?[/quote]

    They are in other countries, being saved by foreign citizens! Krugman (and most others) assume those foreigners will happy to forever fork over their savings to us…

    rich

    August 25, 2009 at 4:48 PM #449103
    Rich Toscano
    Keymaster

    Great post AK. As for this part:

    [quote=AK]Where are the vast sums in private savings that will make up for government deficits and fund our recovery now?[/quote]

    They are in other countries, being saved by foreign citizens! Krugman (and most others) assume those foreigners will happy to forever fork over their savings to us…

    rich

    August 25, 2009 at 4:48 PM #449444
    Rich Toscano
    Keymaster

    Great post AK. As for this part:

    [quote=AK]Where are the vast sums in private savings that will make up for government deficits and fund our recovery now?[/quote]

    They are in other countries, being saved by foreign citizens! Krugman (and most others) assume those foreigners will happy to forever fork over their savings to us…

    rich

    August 25, 2009 at 4:48 PM #449515
    Rich Toscano
    Keymaster

    Great post AK. As for this part:

    [quote=AK]Where are the vast sums in private savings that will make up for government deficits and fund our recovery now?[/quote]

    They are in other countries, being saved by foreign citizens! Krugman (and most others) assume those foreigners will happy to forever fork over their savings to us…

    rich

    August 25, 2009 at 4:48 PM #449701
    Rich Toscano
    Keymaster

    Great post AK. As for this part:

    [quote=AK]Where are the vast sums in private savings that will make up for government deficits and fund our recovery now?[/quote]

    They are in other countries, being saved by foreign citizens! Krugman (and most others) assume those foreigners will happy to forever fork over their savings to us…

    rich

    August 25, 2009 at 10:03 PM #448987
    barnaby33
    Participant

    AK beat me to it. I was just going to say, “China!”

    August 25, 2009 at 10:03 PM #449178
    barnaby33
    Participant

    AK beat me to it. I was just going to say, “China!”

    August 25, 2009 at 10:03 PM #449518
    barnaby33
    Participant

    AK beat me to it. I was just going to say, “China!”

    August 25, 2009 at 10:03 PM #449590
    barnaby33
    Participant

    AK beat me to it. I was just going to say, “China!”

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