Read it at Economonitor | The Wilder View
The chart below illustrates the 3-sector financial balances model – read Scott Fullwiler on New Economic Perspectives for a detailed description of the 3-sector financial balances model. According to this identity, the capital account plus government net saving plus private net saving must equal zero. For a given level of the capital account (Japan’s capital account has been quite stable over the years), when the private sector increases net saving, aggregate demand declines and government net saving declines. [emphasis added]
Japan’s Lopsided Financial Balances
by Rebecca Wilder
(h/t Scott Fullwiler via Twitter)
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