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isa8086's avatar

The drug problem should be tackled on both the supply and demand side, e.g. education, addiction recovery, etc.

On the other hand, tariffs are expected when state capitalism is on the rise. It is a balancing mechanism. But I agree that Trump's instinct could be wrong.

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Sven Glaesel's avatar

Dear Stephen (if I may), Thank you for your clear reasoning and excellent analysis. Best regards from a reader across the pond in Germany, Sven

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Ronald Chao's avatar

People get leaders they deserve!

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Stephen Roach's avatar

Sadly, very true.

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Bert Lourenco's avatar

The cult of personality leads to strange contradictions

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TMacro06's avatar

Great points and another frustrating delusion I find is the continuous references to the past when the US had many tariffs and no income taxes, as if we went back to that all would be great. This couldn't be further from reality...the size of the Government and ever increasing agencies and new ways to waste money is present now and wasn't then...so this argument is missing a huge point. Thank you.

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Stephen Roach's avatar

Contradictions are one thing — lies, distortions, and sheer ignorance are a different matter altogether!

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Stewart Paterson's avatar

I think the savings number you quote is net savings (gross savings minus capital consumption). I think the correct savings number of the S-I=X-M identity is gross savings. which in 3Q24 was about 17% of GDP.

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Stephen Roach's avatar

You are correct on gross vs net saving. I and most others (starting with Martin Feldstein) prefer to use net when linking to the current account. It subtracts depreciation (the wear and tear and obsolescence) of an aging capital stock to provide an approximation of the domestic saving available to fund the net (new) growth of the capital stock. In the case of the US, there basically isn’t any net saving. In other words all we save gets eaten up by depreciation. You can get a similar result by looking at the shortfall of gross domestic saving from its longer term trend.

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Amit Mehta's avatar

Very informative. Thank you Stephen.

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Daniel Arthur Laprès's avatar

Excellent.

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