Money glut

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Global saving glut , also saving glut ( English Saving glut , Savings glut ), is one of Ben Bernanke coined in 2005 term that describes a hypothesis that the world is a surplus of savings in comparison to the investment opportunities existed. For an individual economy, a glut of savings creates a tendency to finance export surpluses instead of investments . According to Bernanke, this is seen in both advanced industrialized and developing countries. One recipient country of these export surpluses is the USA, which has a strong foreign trade deficit.

For Carl Christian von Weizsäcker , the “savings-glow thesis” is related to the thesis based on capital theory of the possibility of a negative, equilibrium real interest rate. In this situation, the equilibrium real interest rate, which leads to equally high investments and savings, would be less than zero.

causes

Bernanke names various reasons for the glut of savings.

In the industrialized countries

  • Demographic aging: As the number of retirees is increasing for demographic reasons compared to the number of people in employment, more savings must be made. Expressed in capital theory: the desire to build up wealth for the purpose of future provision cannot be accommodated in the production process in the form of real capital at a real interest rate greater than zero. The equilibrium real interest rate is less than zero.

As a result, mature economies try to achieve a foreign trade surplus, so they export capital on balance.

Developing countries

  • Export promotion by preventing the currency from appreciating by buying up foreign currencies (usually the US dollar, this currency system is also known as the Bretton Woods II regime ).
  • Rise in oil prices: Middle Eastern oil-exporting countries and Russia, Nigeria and Venezuela have export surpluses. They try to invest this income in the world capital markets.

USA as an importing country

According to Bernanke, the USA was attractive to foreign investors because of new technologies and increasing productivity. The capital flowing into the US increased the value of the dollar, making imports in dollars cheaper and exports in foreign currencies more expensive. This increased the US foreign trade deficit. Niall Ferguson coined the term “ Chimerica ” especially for this regime between the USA and China .

Consequences of the savings glut

  • Rising imbalances in foreign trade around the world
  • Low interest rates: Planned savings that are higher than planned investments lead to a decrease in the interest rate .
  • Rising asset prices as a result of low interest rates.

reception

The thesis of a savings glut is doubted by Hans-Werner Sinn . Rather, the US would have spent more than it received and therefore borrowed heavily abroad. The US government would have encouraged US private debt to support private consumption. This led to a reduction in US savings. The savings came from abroad, but in an unsustainable way.

An additional or alternative thesis to the piggy bank thesis is the thesis of the “bank glut”, which attributes the low interest rates to the monetary policy of the central banks ( low interest rate policy ).

Thomas Mayer and Gunther Schnabl argue that Keynesian theory lacks the banking sector and therefore changes in interest rates by central banks have a direct effect on investments. This assumption is not realistic. In the Austrian business cycle theory, the banking sector plays an important role in the transmission of monetary policy. Too low interest rates could lead to overinvestment and speculative exaggeration in financial markets that negatively impact long-term growth. They find no empirical evidence for the thesis of the savings glut and the hypothesis of secular stagnation . Instead, the low growth could be explained by the emergence of quasi "soft budget restrictions" as a result of low interest rates, which reduce the incentive for banks and companies to strive for efficiency (zombification).

Web links

Footnotes

  1. ↑ "The global glut of savings depresses real interest rates" by Benedikt Fehr, FAZ, February 7, 2008, No. 32, p. 23
  2. ↑ a b Hans-Werner Sinn: The casino capitalism . Econ-Verlag, 2009, ISBN 978-3-430-20084-4 , p. 37
  3. ^ Governor Ben S. Bernanke, The Global Saving Glut and the US Current Account Deficit, Federalreserve.gov, March 2005, accessed June 5, 2009
  4. ^ A b Carl Christian von Weizsäcker: “Limits of the Concept of an Independent Central Bank” Wirtschaftsdienst 2012/2, Zeit talk, pp. 91–94, doi : 10.1007 / s10273-012-1332-0
  5. ↑ http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/default.htm Governor Ben S. Bernanke, The Global Saving Glut and the US Current Account Deficit, Federalreserve.gov, March 2005, accessed June 5 2009
  6. ^ Annual Report of the Council of Economic Advisers . United States Government, Washington DC. March 2009. Archived from the original on August 25, 2009. Retrieved October 8, 2009.
  7. ^ Niall Ferguson: The Ascent of Money. A Financial History of the World, Allen Lane, 2009
  8. ↑ “The American Century Is Not Over”, by Niall Ferguson October 22, 2008 in Welt.Online, on “Chimerica” and “Sparschwemme”
  9. ↑ See Michael Pettis (2013): The great rebalancing. Trade, conflict, and the perilous road ahead for the world economy. Princeton and Oxford. P. 106f.
  10. ↑ The global savings glut depresses real interest rates by Benedikt Fehr, FAZ, February 7, 2008, No. 32, page 23
  11. ↑ Gerald Braunberger, Frankfurter Allgemeine Zeitung , December 11, 2011, blog version of December 10, 2012: "Are the low bond yields really the result of a speculative bubble?"
  12. ↑ Thomas Mayer, Gunther Schnabl: Reasons for the Demise of Interest: Savings Glut and Secular Stagnation or Central Bank Policy? No. 7954 . CESifo Group Munich, 2019 ( repec.org [accessed December 17, 2019]).