Worthwhile Reading - April 28

The Sweden example. James Surowiecki, The New Yorker.


Chinese demand v new Treasury supply. Brad Setser, Follow the Money.
There is a very widespread sense that the US “needs” China more now because it is issuing more Treasuries to finance its fiscal deficit. That isn’t quite true. As a result of the crisis, the US consumer has started to save and American businesses have reduced their investment, so the US “needs” to borrow a lot less from the rest of the world. The US needs to borrow from the world when private Americans do not want to save and the US running a large trade deficit, not when private Americans want to save and the trade deficit is down. The US government is borrowing more, from almost everyone. But other sectors of the economy are borrowing a lot less.