The German Predicament

Matthew Yglesias:

Exporting is great, but we can't all be net exporters unless we find some Martians to export to. Interestingly, it's actually the case that due to statistical discrepencies the planet earth currently does register as a substantial net exporter. Still in the real world this doesn't work mathematically, politically, or economically. I don't think it makes sense to argue that China or Germany or Sweden or what have you is somehow morally obligated to lower its savings rate, but countries deliberately pursuing a policy regime of low consumption and high net exports are obligated to recognize that they are exercising agency. If you want other countries to buy your products you need to either (a) loan them money, (b) give them money, or (c) buy their stuff. Merkel is currently rejecting all three options, which won't work, and in the process is inflicting collateral damage on people all around the world including plenty of thrifty high-productivity savers. That (a) has about run its course seems clear and the political problems with (b) are obvious, but I genuinely don't understand what the objection to (c) is and why she can't say that a little (a) and (b) as a bridge strategy to (c) will ultimately make everyone happier than another ten rounds of recriminations and finger pointing.

The other thing to note is that when you don't do (a), (b) and/or (c), the debt you hold from previously loaning to the people you exported to is at risk of losing value or becoming worthless.  In other words, if you feel like other people should quit spending because they haven't worked and saved like you have, you might want to consider that you better start spending, because what you've saved may begin losing value.  In other words, use it or lose it.