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Isn't this a false dichotomy? The inverse -- high spending and low savings -- still leads to reinvestment. From business POV whether they get funds via loans or
by sooheon 3y ago
Isn't this a false dichotomy? The inverse -- high spending and low savings -- still leads to reinvestment. From business POV whether they get funds via loans or via revenue the money they have to invest in growth is the same.
- steveBK123 3y agoIn China you have a lot of SOA (State Owned Enterprises) and entire sectors loosely under the CCP thumb. So 50% of income going back into banks which then direct capital as the CCP sees fit.. more export oriented growth. This is very different than the US model. In the US ~95% of income goes into spending which flows into private enterprises which make operational cost, capital cost, and saving decisions on their own. The US model is more decentralized. We have to create incentives and schemes like IRA and Opportunity Zones to get private individuals and companies to deploy capital where the government prefers, and even then it only works on the margins.