i don't think that Chinese ownership of US assets is so large as to put our country at risk economically . Ben bernanke
saving and investment so the idea of a world a wash with cheap cash is false
other economists point out that the current account deficits in the USA and other countries amounted to much less than 2 per cent of the money flow , so surely would have only a marginal affect. the savings glut theory also becomes harder to sustain when applied to Europe Germany for instance. in the years leading up to the 2008 crist , was saving-rich. the saving glut theory would imply that Germany which seem highly unlikely
a banking glut ?
Princeton University economics professor Hyun Song Shin has argued that the floods of speculative money chasing after mortgage securities came not from saving glut but the "shadow" banking system the complex variety of financial entities that fall outside the normal banking system including
hedge funds,money markets, and structured investment vehicles . European and American shadow banks were eager to find these securities , and found them in Ireland and Spain as well as the USA
the markets plays in by these shadow banks are "financial instrument" - bet upon bets as to which way markets will go, underpinned by ingenious mathematical formulas. The charge here is that derivatives trading can encourage excessive risk-taking . It also creates a market in which financial institutions can make massive profits by betting on failures , institutions can make massive profits by betting on failures including the failures including the failure of mortgage backed securities .
the extra reserves of a savings glut might be irrelevant in this vital casino . Indeed, the problem seems to have been that the problem seem to been that the banks were trading without sufficient cash back-up . Bernanke points out that whale Chinese and Middle Eastern buyers bought into American securities with funds from trade surpluses and oil exports, the European banks in, leaving them exposed when the crusts hit .
Economists differ in their views about the trade imbalances that underlie the saving glut . Some have gyred that the US trade deficit can be sustained, and that it would always be funded easily by foreign savings. Others worry about a hard landing for the US economy if capital flows were to dry up . Much of thais has become a political issue between the USA and China as US politicians have charged China with keeping its currency unfairly low in order to support its trade surplus .
Ben Bernanke
Ben Shalom Bernanke was born and raised in South Carolina, USA . In the early 1970s, Bernanke went to Harvard University and then to the Massachusetts Institude of Technology , where he did a PhD in economics under the supervision of the Bank of Israel.
Bernanke joined the US Federal Reserve in 2002 . In 2004 , he proposed the idea of the Great moderation, which suggest that modern monetary policies had volatility of the business cycle. In 2006 Bernanke was made chairman of the Federal Reserve has been smooth, and he has been criticised for failing to foresee the financial crisis and for bailing out Wall Street Finance houses.
Key works
2002 Deflation : Making Sure It Doesn't Happen Here
2005 The Global Saving Glut and the US Current Account Deficit
2007 Global Imbalances
More EQUAL SOCIETIES GROW FASTER INEQUALITY GROWTH
in context
Focus
Growth and development
Key thinkers
Alberto Alesina (1957-)
Dani Rodrik (1957-)
BEFORE
1995 US economist Simon Kuznets publishes Economic Growth and Income Inequality is a side eftect of growth .
1989 US economists Kevin Murphy Andrei Shleifer, and Robert Vishny claim income distribution affects demand.
AFTER
1996 Italian economist Roberto Perrotti claims that there is on link between lower taxes and hi her growth.
2007 Spanish economist Xavier Sala-i-Martin argues that growing economies have reduced inequality.
Wealth is divided inequitably through society
Those without accumulated capital become dissatisfied
and call for more redistributive policies from the government
But redistributive is paid for through higher taxes on accumulated capital
and higher taxes slow economic growth .
more equal societies grow faster.
For much of the 20th century , economists asked themselves how economists growth affects people's incomes. Dose growth increase or decrease income inequality ? In 1994, Italian economist Dani Rodrik turned the question on its head . They wondered how income distribution affects economic growth .
Alesina and Rodrik examined two factors in their model : labour and capital (accumulated wealth). They argued that economic growth is fuelled by growth in total capital, but government services are funded by a tax on capital. This means the higher the taxes on accumulated wealth , the less incentive will there be to accumulate capital and the lower the growth rate of the economy will be.
Those whose income derives mostly from accumulated capital prefer a lower tax rate. On the other hand, an individual who has no accumulated wealth and whose income derives entirely from his labour , tends to prefer a higher tax rate . This will provide him with public services and allows for a better redistribution
i don't think that Chinese ownership of US assets is so large as to put our country at risk economically . Ben bernanke
saving and investment so the idea of a world a wash with cheap cash is false
other economists point out that the current account deficits in the USA and other countries amounted to much less than 2 per cent of the money flow , so surely would have only a marginal affect. the savings glut theory also becomes harder to sustain when applied to Europe Germany for instance. in the years leading up to the 2008 crist , was saving-rich. the saving glut theory would imply that Germany which seem highly unlikely
a banking glut ?
Princeton University economics professor Hyun Song Shin has argued that the floods of speculative money chasing after mortgage securities came not from saving glut but the "shadow" banking system the complex variety of financial entities that fall outside the normal banking system including
hedge funds,money markets, and structured investment vehicles . European and American shadow banks were eager to find these securities , and found them in Ireland and Spain as well as the USA
the markets plays in by these shadow banks are "financial instrument" - bet upon bets as to which way markets will go, underpinned by ingenious mathematical formulas. The charge here is that derivatives trading can encourage excessive risk-taking . It also creates a market in which financial institutions can make massive profits by betting on failures , institutions can make massive profits by betting on failures including the failures including the failure of mortgage backed securities .
the extra reserves of a savings glut might be irrelevant in this vital casino . Indeed, the problem seems to have been that the problem seem to been that the banks were trading without sufficient cash back-up . Bernanke points out that whale Chinese and Middle Eastern buyers bought into American securities with funds from trade surpluses and oil exports, the European banks in, leaving them exposed when the crusts hit .
Economists differ in their views about the trade imbalances that underlie the saving glut . Some have gyred that the US trade deficit can be sustained, and that it would always be funded easily by foreign savings. Others worry about a hard landing for the US economy if capital flows were to dry up . Much of thais has become a political issue between the USA and China as US politicians have charged China with keeping its currency unfairly low in order to support its trade surplus .
Ben Bernanke
Ben Shalom Bernanke was born and raised in South Carolina, USA . In the early 1970s, Bernanke went to Harvard University and then to the Massachusetts Institude of Technology , where he did a PhD in economics under the supervision of the Bank of Israel.
Bernanke joined the US Federal Reserve in 2002 . In 2004 , he proposed the idea of the Great moderation, which suggest that modern monetary policies had volatility of the business cycle. In 2006 Bernanke was made chairman of the Federal Reserve has been smooth, and he has been criticised for failing to foresee the financial crisis and for bailing out Wall Street Finance houses.
Key works
2002 Deflation : Making Sure It Doesn't Happen Here
2005 The Global Saving Glut and the US Current Account Deficit
2007 Global Imbalances
More EQUAL SOCIETIES GROW FASTER INEQUALITY GROWTH
in context
Focus
Growth and development
Key thinkers
Alberto Alesina (1957-)
Dani Rodrik (1957-)
BEFORE
1995 US economist Simon Kuznets publishes Economic Growth and Income Inequality is a side eftect of growth .
1989 US economists Kevin Murphy Andrei Shleifer, and Robert Vishny claim income distribution affects demand.
AFTER
1996 Italian economist Roberto Perrotti claims that there is on link between lower taxes and hi her growth.
2007 Spanish economist Xavier Sala-i-Martin argues that growing economies have reduced inequality.
Wealth is divided inequitably through society
Those without accumulated capital become dissatisfied
and call for more redistributive policies from the government
But redistributive is paid for through higher taxes on accumulated capital
and higher taxes slow economic growth .
more equal societies grow faster.
For much of the 20th century , economists asked themselves how economists growth affects people's incomes. Dose growth increase or decrease income inequality ? In 1994, Italian economist Dani Rodrik turned the question on its head . They wondered how income distribution affects economic growth .
Alesina and Rodrik examined two factors in their model : labour and capital (accumulated wealth). They argued that economic growth is fuelled by growth in total capital, but government services are funded by a tax on capital. This means the higher the taxes on accumulated wealth , the less incentive will there be to accumulate capital and the lower the growth rate of the economy will be.
Those whose income derives mostly from accumulated capital prefer a lower tax rate. On the other hand, an individual who has no accumulated wealth and whose income derives entirely from his labour , tends to prefer a higher tax rate . This will provide him with public services and allows for a better redistribution
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