Is the dollar bond issuance by Germany and Austria as innocuous as this headline suggests?

so spending might be down in spite of increased savings, not because of it. and it’s down because the savings desires still exceed actual savings even at the higher levels of deficits/savings.

when spending picks up you’ll know savings desires have been met, at least for the moment.

Exactly. The point is, when consumers are as overleveraged as they are currently, any fiscal adjustment is going to be used mostly for savings and debt paydown – and that’s a feature, not a bug. The natural conclusion is just to increase the adjustment until savings desires are met and spending picks up. But since virtually everybody, including so-called “Keynesians” thinks that fiscal adjustments “cost” something that needs to be “paid back” instead of just being changed numbers in a spreadsheet, they get caught up in these absurd arguments about “bang for the buck” and “multipliers”…

Warren,

I’d love to get your comments on today WSJ editorial “The Stimulus Didn’t Work”.

My own two cents is that critics of the stimulus ignore or downplay the deflation-mitigation effects of increasing private sector savings and instead obsess over the multiplier.

Actually, the problem is that he has failed to appoint advisors who understand the simplicity of financial systems. They think they are more complex than they are…