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Post being replied to

That's the basic idea by ufl

and it works out with bilateral trade balances as well as the overall balance.

Countries that save a lot should run current account surpluses with countries that don't (which shows up as a deficit for the latter). What country has a low saving rate? U.S. What country saves a lot? China. The U.S current account deficit with China is the largest in the world.

That's because China floods the market with cheap goods, right? Is that why we have a very large trade deficit with Japan? all those cheap Japanese goods? No. It's because Japan has a signficantly higher saving rate.

This one of those questions where the economists' orthodoxy and popular perception are far apart. It's also on where the economists' story works pretty well.