Since 2000 the value of global wealth held by households, firms and governments has roughly tripled, from $160trn to $510trn
In 1999, Mr Bernanke had chided the Bank of Japan for failing to rekindle Japanese growth after a bubble burst, despite reducing interest rates to zero. Yet in the 15 years after he christened the saving glut, finance ministries and central bankers around the world became familiar with the struggle to maintain steady growth in the context of zealous saving.
Other economies pile up foreign-exchange reserves as they intervene in markets to reduce the value of their currencies, to boost exports or to build up a hoard of safe assets which can be drawn upon in times of financial stress. In effect, these interventions squeeze consumption in their home economies, reducing spending relative to production and thus contributing to current-account surpluses which must be absorbed by the rest of the global economy.
The effects of reserve accumulation could also be offset by increased government borrowing. Government debt loads, already high pre-pandemic, have exploded over the past two years; in 2020 alone, public debt as a share ofsurged by nearly 20 percentage points across advanced economies, to 123%, and nearly ten points across emerging economies, to 63%.
A retreat from globalisation could amplify these trends. It would increase the earning power of the working masses in rich countries, while hitting the profits of multinational firms and the higher incomes of their white-collar workers. On the other hand, substantial reversals in inequality are relatively rare in recent economic history.
In a recent paper examining the effects of demographic change on saving, Etienne Gagnon, Benjamin Johannsen and David López-Salido of the Federal Reserve Board suggest that ageing in America may account for about one percentage point of the drop in interest rates since the 1980s. If past is prologue, rates seem sure to remain low. Barring a surge in procreation, or the embrace of a dystopian “Logan’s Run” approach to the aged, the world’s population will continue to get older.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
IS chief al-Qurayshi: Why getting him mattered so much to the USThe operation which killed the head of the extremist group was unusually high-risk.
Read more »
Top cat: why the puma is a leading influencer in the animal kingdomResearchers find the felines are connected to more than 485 species, from carrion beetles to bald eagles
Read more »
Why the Facebook owner’s shares are in freefallAnalysis: shares in Meta fell by 25% after latest results revealed first-ever decline in daily users
Read more »
Cold warrior: why Eileen Gu ditched Team USA to ski for ChinaEileen Gu has had an all-American childhood. Why is she skiing for China at the Beijing Olympics? 1843mag investigates
Read more »
Five of Boris Johnson’s aides QUIT - Who they are and why have they resigned?BORIS Johnson has now lost five key aides in a brutal 24 hours that has sent Downing Street into meltdown. Some were culled as part of a planned clearout of top staff to satisfy baying Tory MPs …
Read more »